Correlation Between PT Astra and First Resources

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

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

Diversification Opportunities for PT Astra and First Resources

0.0

Correlation Coefficient

PT Astra  First Resources

Pay attention - limited upside

The 3 months correlation between PTABF and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra Agro and First Resources Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Resources 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 Agro are associated (or correlated) with First Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Resources has no effect on the direction of PT Astra i.e., PT Astra and First Resources go up and down completely randomly.

Pair Corralation between PT Astra and First Resources

If you would invest (100.00) in First Resources Ltd on February 3, 2024 and sell it today you would earn a total of  100.00  from holding First Resources Ltd or generate -100.0% return on investment over 90 days.

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

PT Astra Agro  vs.  First Resources Ltd

PT Astra Agro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Astra Agro has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, PT Astra is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

First Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PT Astra and First Resources

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

The idea behind PT Astra Agro and First Resources Ltd 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 Stocks Directory module to find actively traded stocks across global markets.