Correlation Between PT Astra and Solvay Bank

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

Diversification Opportunities for PT Astra and Solvay Bank

0.26

Correlation Coefficient

PT Astra  Solvay Bank

Modest diversification

The 3 months correlation between PTAIF and Solvay is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Solvay Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay Bank Corp 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 Solvay Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay Bank Corp has no effect on the direction of PT Astra i.e., PT Astra and Solvay Bank go up and down completely randomly.

Pair Corralation between PT Astra and Solvay Bank

Assuming the 90 days horizon PT Astra International is expected to generate 1.29 times more return on investment than Solvay Bank. However, PT Astra is 1.29 times more volatile than Solvay Bank Corp. It trades about 0.12 of its potential returns per unit of risk. Solvay Bank Corp is currently generating about 0.03 per unit of risk. If you would invest  28.00  in PT Astra International on May 10, 2025 and sell it today you would earn a total of  4.00  from holding PT Astra International or generate 14.29% return on investment over 90 days.

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

PT Astra International  vs.  Solvay Bank Corp

PT Astra International

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, PT Astra reported solid returns over the last few months and may actually be approaching a breakup point.

Solvay Bank Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solvay Bank Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Solvay Bank 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 Solvay Bank

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

The idea behind PT Astra International and Solvay Bank Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.