Correlation Between FKS Food and Astra International

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

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

Diversification Opportunities for FKS Food and Astra International

0.49

Correlation Coefficient

FKS Food  Astra International

Very weak diversification

The 3 months correlation between FKS and Astra is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding FKS Food Sejahtera and Astra International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra International Tbk and FKS Food 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 FKS Food Sejahtera are associated (or correlated) with Astra International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra International Tbk has no effect on the direction of FKS Food i.e., FKS Food and Astra International go up and down completely randomly.

Pair Corralation between FKS Food and Astra International

Assuming the 90 days trading horizon FKS Food Sejahtera is expected to under-perform the Astra International. But the stock apears to be less risky and, when comparing its historical volatility, FKS Food Sejahtera is 1.03 times less risky than Astra International. The stock trades about -0.12 of its potential returns per unit of risk. The Astra International Tbk is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  530,000  in Astra International Tbk on February 11, 2024 and sell it today you would lose (17,500) from holding Astra International Tbk or give up 3.3% of portfolio value over 90 days.

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

FKS Food Sejahtera  vs.  Astra International Tbk

FKS Food Sejahtera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FKS Food Sejahtera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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. Despite quite persistent basic indicators, Astra International is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with FKS Food and Astra International

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

The idea behind FKS Food Sejahtera and Astra International Tbk 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.