Correlation Between Repower Asia and Makmur Berkah

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

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

Diversification Opportunities for Repower Asia and Makmur Berkah

-0.56

Correlation Coefficient

Repower Asia  Makmur Berkah

Excellent diversification

The 3 months correlation between Repower and Makmur is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Repower Asia Indonesia and Makmur Berkah Amanda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Makmur Berkah Amanda and Repower Asia 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 Repower Asia Indonesia are associated (or correlated) with Makmur Berkah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Makmur Berkah Amanda has no effect on the direction of Repower Asia i.e., Repower Asia and Makmur Berkah go up and down completely randomly.

Pair Corralation between Repower Asia and Makmur Berkah

Assuming the 90 days trading horizon Repower Asia Indonesia is expected to generate 12.61 times more return on investment than Makmur Berkah. However, Repower Asia is 12.61 times more volatile than Makmur Berkah Amanda. It trades about 0.04 of its potential returns per unit of risk. Makmur Berkah Amanda is currently generating about -0.08 per unit of risk. If you would invest  900.00  in Repower Asia Indonesia on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Repower Asia Indonesia or generate 0.0% return on investment over 90 days.

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

Repower Asia Indonesia  vs.  Makmur Berkah Amanda

Repower Asia Indonesia

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Repower Asia Indonesia are ranked lower than 4 (%) 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.

Makmur Berkah Amanda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Makmur Berkah Amanda has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Repower Asia and Makmur Berkah

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

The idea behind Repower Asia Indonesia and Makmur Berkah Amanda 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.