Correlation Between Astra International and Power Digital

Can any of the company-specific risk be diversified away by investing in both Astra International and Power Digital 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 Power Digital 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 Power Digital Infrastructure, you can compare the effects of market volatilities on Astra International and Power Digital 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 Power Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra International and Power Digital.

Diversification Opportunities for Astra International and Power Digital

-0.48

Correlation Coefficient

Astra International  Power Digital

Very good diversification

The 3 months correlation between Astra and Power is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Power Digital Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Digital Infras 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 Power Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Digital Infras has no effect on the direction of Astra International i.e., Astra International and Power Digital go up and down completely randomly.

Pair Corralation between Astra International and Power Digital

Assuming the 90 days horizon Astra International is expected to generate 1.21 times less return on investment than Power Digital. In addition to that, Astra International is 3.32 times more volatile than Power Digital Infrastructure. It trades about 0.01 of its total potential returns per unit of risk. Power Digital Infrastructure is currently generating about 0.06 per unit of volatility. If you would invest  1,011  in Power Digital Infrastructure on September 4, 2024 and sell it today you would earn a total of  40.00  from holding Power Digital Infrastructure or generate 3.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	29.9%
Values	Daily Returns

Astra International Tbk  vs.  Power Digital Infrastructure

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.

Power Digital Infras

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Digital Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Power Digital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Astra International and Power Digital

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

The idea behind Astra International Tbk and Power Digital Infrastructure 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 CEOs Directory module to screen CEOs from public companies around the world.