Correlation Between PT Astra and Tianci International

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

Diversification Opportunities for PT Astra and Tianci International

-0.39

Correlation Coefficient

PT Astra  Tianci International

Very good diversification

The 3 months correlation between PTAIF and Tianci is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Tianci International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianci International 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 Tianci International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianci International has no effect on the direction of PT Astra i.e., PT Astra and Tianci International go up and down completely randomly.

Pair Corralation between PT Astra and Tianci International

Assuming the 90 days horizon PT Astra is expected to generate 6.82 times less return on investment than Tianci International. But when comparing it to its historical volatility, PT Astra International is 3.06 times less risky than Tianci International. It trades about 0.05 of its potential returns per unit of risk. Tianci International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Tianci International on September 23, 2024 and sell it today you would earn a total of  200.00  from holding Tianci International or generate 100.0% return on investment over 90 days.

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

PT Astra International  vs.  Tianci International

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 nearly stable forward indicators, PT Astra is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Tianci International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tianci International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Tianci International is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Astra and Tianci International

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

The idea behind PT Astra International and Tianci International 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.