Correlation Between Repower Asia and Karya Bersama

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

Diversification Opportunities for Repower Asia and Karya Bersama

0.21

Correlation Coefficient

Repower Asia  Karya Bersama

Modest diversification

The 3 months correlation between Repower and Karya is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Repower Asia Indonesia and Karya Bersama Anugerah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karya Bersama Anugerah 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 Karya Bersama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karya Bersama Anugerah has no effect on the direction of Repower Asia i.e., Repower Asia and Karya Bersama go up and down completely randomly.

Pair Corralation between Repower Asia and Karya Bersama

Assuming the 90 days trading horizon Repower Asia Indonesia is expected to generate 1.86 times more return on investment than Karya Bersama. However, Repower Asia is 1.86 times more volatile than Karya Bersama Anugerah. It trades about 0.11 of its potential returns per unit of risk. Karya Bersama Anugerah is currently generating about 0.07 per unit of risk. If you would invest  700.00  in Repower Asia Indonesia on September 20, 2024 and sell it today you would earn a total of  100.00  from holding Repower Asia Indonesia or generate 14.29% return on investment over 90 days.

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

Repower Asia Indonesia  vs.  Karya Bersama Anugerah

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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Karya Bersama Anugerah

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Repower Asia and Karya Bersama

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

The idea behind Repower Asia Indonesia and Karya Bersama Anugerah 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.