Correlation Between Repower Asia and Bima Sakti

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

Diversification Opportunities for Repower Asia and Bima Sakti

0.84

Correlation Coefficient

Repower Asia  Bima Sakti

Very poor diversification

The 3 months correlation between Repower and Bima is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Repower Asia Indonesia and Bima Sakti Pertiwi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bima Sakti Pertiwi 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 Bima Sakti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bima Sakti Pertiwi has no effect on the direction of Repower Asia i.e., Repower Asia and Bima Sakti go up and down completely randomly.

Pair Corralation between Repower Asia and Bima Sakti

Assuming the 90 days trading horizon Repower Asia Indonesia is expected to generate 2.85 times more return on investment than Bima Sakti. However, Repower Asia is 2.85 times more volatile than Bima Sakti Pertiwi. It trades about 0.2 of its potential returns per unit of risk. Bima Sakti Pertiwi is currently generating about 0.21 per unit of risk. 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

Repower Asia Indonesia  vs.  Bima Sakti Pertiwi

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.

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.

Pair Trading with Repower Asia and Bima Sakti

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

The idea behind Repower Asia Indonesia and Bima Sakti Pertiwi 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.