Correlation Between Douglas Dynamics and PT Astra

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

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

Diversification Opportunities for Douglas Dynamics and PT Astra

-0.28

Correlation Coefficient

Douglas Dynamics  PT Astra

Very good diversification

The 3 months correlation between Douglas and PTAIF is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Dynamics and PT Astra International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Astra International and Douglas Dynamics 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 Douglas Dynamics are associated (or correlated) with PT Astra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Astra International has no effect on the direction of Douglas Dynamics i.e., Douglas Dynamics and PT Astra go up and down completely randomly.

Pair Corralation between Douglas Dynamics and PT Astra

Given the investment horizon of 90 days Douglas Dynamics is expected to generate 0.35 times more return on investment than PT Astra. However, Douglas Dynamics is 2.84 times less risky than PT Astra. It trades about 0.2 of its potential returns per unit of risk. PT Astra International is currently generating about -0.13 per unit of risk. If you would invest  2,274  in Douglas Dynamics on March 9, 2024 and sell it today you would earn a total of  284.00  from holding Douglas Dynamics or generate 12.49% return on investment over 90 days.

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

Douglas Dynamics  vs.  PT Astra International

Douglas Dynamics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Douglas Dynamics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Douglas Dynamics is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 unfluctuating performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Douglas Dynamics and PT Astra

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

The idea behind Douglas Dynamics and PT Astra 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.