Correlation Between Astra International and Affiliated Resources

Can any of the company-specific risk be diversified away by investing in both Astra International and Affiliated Resources 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 Astra International and Affiliated Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astra International Tbk and Affiliated Resources Corp, you can compare the effects of market volatilities on Astra International and Affiliated Resources 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 Astra International with a short position of Affiliated Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra International and Affiliated Resources.

Diversification Opportunities for Astra International and Affiliated Resources

0.51

Correlation Coefficient

Astra International  Affiliated Resources

Very weak diversification

The 3 months correlation between Astra and Affiliated is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Affiliated Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Resources Corp and Astra International 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 Astra International Tbk are associated (or correlated) with Affiliated Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Resources Corp has no effect on the direction of Astra International i.e., Astra International and Affiliated Resources go up and down completely randomly.

Pair Corralation between Astra International and Affiliated Resources

Assuming the 90 days horizon Astra International is expected to generate 1.58 times less return on investment than Affiliated Resources. But when comparing it to its historical volatility, Astra International Tbk is 2.97 times less risky than Affiliated Resources. It trades about 0.01 of its potential returns per unit of risk. Affiliated Resources Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Affiliated Resources Corp on September 13, 2024 and sell it today you would lose (1.05) from holding Affiliated Resources Corp or give up 10.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Astra International Tbk  vs.  Affiliated Resources Corp

Astra International Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra International Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Astra International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Affiliated Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Affiliated Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Affiliated Resources is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Astra International and Affiliated Resources

The main advantage of trading using opposite Astra International and Affiliated Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astra International position performs unexpectedly, Affiliated Resources 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 Affiliated Resources will offset losses from the drop in Affiliated Resources' long position.

The idea behind Astra International Tbk and Affiliated Resources Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.