Correlation Between PT Astra and Trend Micro

Can any of the company-specific risk be diversified away by investing in both PT Astra and Trend Micro at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PT Astra and Trend Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Astra International and Trend Micro ADR, you can compare the effects of market volatilities on PT Astra and Trend Micro and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PT Astra with a short position of Trend Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and Trend Micro.

Diversification Opportunities for PT Astra and Trend Micro

-0.23

Correlation Coefficient

PT Astra  Trend Micro

Very good diversification

The 3 months correlation between PTAIF and Trend is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Trend Micro ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trend Micro ADR and PT Astra is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PT Astra International are associated (or correlated) with Trend Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trend Micro ADR has no effect on the direction of PT Astra i.e., PT Astra and Trend Micro go up and down completely randomly.

Pair Corralation between PT Astra and Trend Micro

Assuming the 90 days horizon PT Astra International is expected to under-perform the Trend Micro. In addition to that, PT Astra is 1.66 times more volatile than Trend Micro ADR. It trades about -0.13 of its total potential returns per unit of risk. Trend Micro ADR is currently generating about -0.08 per unit of volatility. If you would invest  5,933  in Trend Micro ADR on September 28, 2024 and sell it today you would lose (509.00) from holding Trend Micro ADR or give up 8.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PT Astra International  vs.  Trend Micro ADR

PT Astra International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Astra International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Trend Micro ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trend Micro ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PT Astra and Trend Micro

The main advantage of trading using opposite PT Astra and Trend Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Astra position performs unexpectedly, Trend Micro can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Trend Micro will offset losses from the drop in Trend Micro's long position.

The idea behind PT Astra International and Trend Micro ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.