Correlation Between Polychem Indonesia and Pan Brothers

Can any of the company-specific risk be diversified away by investing in both Polychem Indonesia and Pan Brothers 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 Polychem Indonesia and Pan Brothers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Polychem Indonesia Tbk and Pan Brothers Tbk, you can compare the effects of market volatilities on Polychem Indonesia and Pan Brothers 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 Polychem Indonesia with a short position of Pan Brothers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polychem Indonesia and Pan Brothers.

Diversification Opportunities for Polychem Indonesia and Pan Brothers

0.0

Correlation Coefficient

Polychem Indonesia  Pan Brothers

Pay attention - limited upside

The 3 months correlation between Polychem and Pan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Polychem Indonesia Tbk and Pan Brothers Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Brothers Tbk and Polychem Indonesia 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 Polychem Indonesia Tbk are associated (or correlated) with Pan Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Brothers Tbk has no effect on the direction of Polychem Indonesia i.e., Polychem Indonesia and Pan Brothers go up and down completely randomly.

Pair Corralation between Polychem Indonesia and Pan Brothers

If you would invest  2,000  in Pan Brothers Tbk on September 15, 2024 and sell it today you would earn a total of  300.00  from holding Pan Brothers Tbk or generate 15.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Polychem Indonesia Tbk  vs.  Pan Brothers Tbk

Polychem Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pan Brothers Tbk

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pan Brothers Tbk are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pan Brothers disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polychem Indonesia and Pan Brothers

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

The idea behind Polychem Indonesia Tbk and Pan Brothers 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.