Correlation Between Repower Asia and Nusantara Almazia

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

Diversification Opportunities for Repower Asia and Nusantara Almazia

0.21

Correlation Coefficient

Repower Asia  Nusantara Almazia

Modest diversification

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

Pair Corralation between Repower Asia and Nusantara Almazia

Assuming the 90 days trading horizon Repower Asia Indonesia is expected to under-perform the Nusantara Almazia. In addition to that, Repower Asia is 1.04 times more volatile than Nusantara Almazia. It trades about -0.01 of its total potential returns per unit of risk. Nusantara Almazia is currently generating about -0.01 per unit of volatility. If you would invest  8,100  in Nusantara Almazia on September 19, 2024 and sell it today you would lose (1,200) from holding Nusantara Almazia or give up 14.81% of portfolio value over 90 days.

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

Repower Asia Indonesia  vs.  Nusantara Almazia

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 quite persistent forward-looking signals, Repower Asia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Nusantara Almazia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nusantara Almazia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Nusantara Almazia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Repower Asia and Nusantara Almazia

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

The idea behind Repower Asia Indonesia and Nusantara Almazia 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.