Correlation Between Repower Asia and DMS Propertindo

Can any of the company-specific risk be diversified away by investing in both Repower Asia and DMS Propertindo 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 DMS Propertindo 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 DMS Propertindo Tbk, you can compare the effects of market volatilities on Repower Asia and DMS Propertindo 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 DMS Propertindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Repower Asia and DMS Propertindo.

Diversification Opportunities for Repower Asia and DMS Propertindo

0.69

Correlation Coefficient

Repower Asia  DMS Propertindo

Poor diversification

The 3 months correlation between Repower and DMS is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Repower Asia Indonesia and DMS Propertindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DMS Propertindo Tbk 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 DMS Propertindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DMS Propertindo Tbk has no effect on the direction of Repower Asia i.e., Repower Asia and DMS Propertindo go up and down completely randomly.

Pair Corralation between Repower Asia and DMS Propertindo

Assuming the 90 days trading horizon Repower Asia Indonesia is expected to under-perform the DMS Propertindo. But the stock apears to be less risky and, when comparing its historical volatility, Repower Asia Indonesia is 1.1 times less risky than DMS Propertindo. The stock trades about -0.1 of its potential returns per unit of risk. The DMS Propertindo Tbk is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,200  in DMS Propertindo Tbk on August 31, 2024 and sell it today you would lose (300.00) from holding DMS Propertindo Tbk or give up 25.0% of portfolio value over 90 days.

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

Repower Asia Indonesia  vs.  DMS Propertindo Tbk

Repower Asia Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Repower Asia Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

DMS Propertindo Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DMS Propertindo Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Repower Asia and DMS Propertindo

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

The idea behind Repower Asia Indonesia and DMS Propertindo Tbk 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.