Correlation Between Bank Rakyat and Paninvest Tbk

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Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Paninvest Tbk 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 Bank Rakyat and Paninvest Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat Indonesia and Paninvest Tbk, you can compare the effects of market volatilities on Bank Rakyat and Paninvest Tbk 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 Bank Rakyat with a short position of Paninvest Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Paninvest Tbk.

Diversification Opportunities for Bank Rakyat and Paninvest Tbk

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Bank and Paninvest is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat Indonesia and Paninvest Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paninvest Tbk and Bank Rakyat 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 Bank Rakyat Indonesia are associated (or correlated) with Paninvest Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paninvest Tbk has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Paninvest Tbk go up and down completely randomly.

Pair Corralation between Bank Rakyat and Paninvest Tbk

Assuming the 90 days trading horizon Bank Rakyat Indonesia is expected to under-perform the Paninvest Tbk. But the stock apears to be less risky and, when comparing its historical volatility, Bank Rakyat Indonesia is 1.27 times less risky than Paninvest Tbk. The stock trades about -0.09 of its potential returns per unit of risk. The Paninvest Tbk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  95,500  in Paninvest Tbk on September 3, 2024 and sell it today you would earn a total of  11,000  from holding Paninvest Tbk or generate 11.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bank Rakyat Indonesia  vs.  Paninvest Tbk

 Performance 
       Timeline  
Bank Rakyat Indonesia 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bank Rakyat 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.
Paninvest Tbk 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Paninvest Tbk are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Paninvest Tbk disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bank Rakyat and Paninvest Tbk Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank Rakyat and Paninvest Tbk

The main advantage of trading using opposite Bank Rakyat and Paninvest Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Paninvest Tbk 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 Paninvest Tbk will offset losses from the drop in Paninvest Tbk's long position.
The idea behind Bank Rakyat Indonesia and Paninvest 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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