Correlation Between Bima Sakti and Repower Asia

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

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

Diversification Opportunities for Bima Sakti and Repower Asia

0.84

Correlation Coefficient

Bima Sakti  Repower Asia

Very poor diversification

The 3 months correlation between Bima and Repower is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bima Sakti Pertiwi 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 Bima Sakti 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 Bima Sakti Pertiwi 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 Bima Sakti i.e., Bima Sakti and Repower Asia go up and down completely randomly.

Pair Corralation between Bima Sakti and Repower Asia

Assuming the 90 days trading horizon Bima Sakti is expected to generate 2.65 times less return on investment than Repower Asia. But when comparing it to its historical volatility, Bima Sakti Pertiwi is 2.85 times less risky than Repower Asia. It trades about 0.21 of its potential returns per unit of risk. Repower Asia Indonesia is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  800.00  in Repower Asia Indonesia on December 30, 2024 and sell it today you would earn a total of  800.00  from holding Repower Asia Indonesia or generate 100.0% return on investment over 90 days.

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

Bima Sakti Pertiwi  vs.  Repower Asia Indonesia

Bima Sakti Pertiwi

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bima Sakti Pertiwi are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bima Sakti disclosed solid returns over the last few months and may actually be approaching a breakup point.

Repower Asia Indonesia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Repower Asia Indonesia are ranked lower than 15 (%) 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 Bima Sakti and Repower Asia

The main advantage of trading using opposite Bima Sakti and Repower Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bima Sakti 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 Bima Sakti Pertiwi 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.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.