Correlation Between Bank Central and Panca Anugrah

Can any of the company-specific risk be diversified away by investing in both Bank Central and Panca Anugrah 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 Central and Panca Anugrah into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank Central Asia and Panca Anugrah Wisesa, you can compare the effects of market volatilities on Bank Central and Panca Anugrah 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 Central with a short position of Panca Anugrah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Panca Anugrah.

Diversification Opportunities for Bank Central and Panca Anugrah

-0.41

Correlation Coefficient

Bank Central  Panca Anugrah

Very good diversification

The 3 months correlation between Bank and Panca is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Panca Anugrah Wisesa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panca Anugrah Wisesa and Bank Central 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 Central Asia are associated (or correlated) with Panca Anugrah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panca Anugrah Wisesa has no effect on the direction of Bank Central i.e., Bank Central and Panca Anugrah go up and down completely randomly.

Pair Corralation between Bank Central and Panca Anugrah

Assuming the 90 days trading horizon Bank Central Asia is expected to under-perform the Panca Anugrah. But the stock apears to be less risky and, when comparing its historical volatility, Bank Central Asia is 2.19 times less risky than Panca Anugrah. The stock trades about -0.07 of its potential returns per unit of risk. The Panca Anugrah Wisesa is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  7,800  in Panca Anugrah Wisesa on December 29, 2024 and sell it today you would earn a total of  1,700  from holding Panca Anugrah Wisesa or generate 21.79% return on investment over 90 days.

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

Bank Central Asia  vs.  Panca Anugrah Wisesa

Bank Central Asia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Central Asia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Panca Anugrah Wisesa

Risk-Adjusted Performance

OK

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

Pair Trading with Bank Central and Panca Anugrah

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

The idea behind Bank Central Asia and Panca Anugrah Wisesa 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.