Correlation Between PT Homeco and Repower Asia

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

By analyzing existing cross correlation between PT Homeco Victoria and Repower Asia Indonesia, you can compare the effects of market volatilities on PT Homeco and Repower Asia 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 Homeco with a short position of Repower Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Homeco and Repower Asia.

Diversification Opportunities for PT Homeco and Repower Asia

-0.2

Correlation Coefficient

PT Homeco  Repower Asia

Good diversification

The 3 months correlation between LIVE and Repower is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding PT Homeco Victoria and Repower Asia Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repower Asia Indonesia and PT Homeco 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 Homeco Victoria are associated (or correlated) with Repower Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repower Asia Indonesia has no effect on the direction of PT Homeco i.e., PT Homeco and Repower Asia go up and down completely randomly.

Pair Corralation between PT Homeco and Repower Asia

Assuming the 90 days trading horizon PT Homeco Victoria is expected to generate 0.49 times more return on investment than Repower Asia. However, PT Homeco Victoria is 2.03 times less risky than Repower Asia. It trades about 0.04 of its potential returns per unit of risk. Repower Asia Indonesia is currently generating about -0.01 per unit of risk. If you would invest  17,400  in PT Homeco Victoria on November 29, 2024 and sell it today you would earn a total of  3,200  from holding PT Homeco Victoria or generate 18.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	53.0%
Values	Daily Returns

PT Homeco Victoria  vs.  Repower Asia Indonesia

PT Homeco Victoria

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Homeco Victoria are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Homeco may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Repower Asia Indonesia

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Repower Asia Indonesia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Repower Asia disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Homeco and Repower Asia

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

The idea behind PT Homeco Victoria and Repower Asia Indonesia 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .