Correlation Between Alphabet and Panin Financial

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

By analyzing existing cross correlation between Alphabet Inc Class C and Panin Financial Tbk, you can compare the effects of market volatilities on Alphabet and Panin Financial 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 Alphabet with a short position of Panin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Panin Financial.

Diversification Opportunities for Alphabet and Panin Financial

0.89

Correlation Coefficient

Alphabet  Panin Financial

Very poor diversification

The 3 months correlation between Alphabet and Panin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Panin Financial Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panin Financial Tbk and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Panin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panin Financial Tbk has no effect on the direction of Alphabet i.e., Alphabet and Panin Financial go up and down completely randomly.

Pair Corralation between Alphabet and Panin Financial

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the Panin Financial. But the stock apears to be less risky and, when comparing its historical volatility, Alphabet Inc Class C is 1.64 times less risky than Panin Financial. The stock trades about -0.16 of its potential returns per unit of risk. The Panin Financial Tbk is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  43,000  in Panin Financial Tbk on December 30, 2024 and sell it today you would lose (6,200) from holding Panin Financial Tbk or give up 14.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.77%
Values	Daily Returns

Alphabet Inc Class C  vs.  Panin Financial Tbk

Alphabet Class C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class C 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 basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Panin Financial Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Panin Financial Tbk 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Alphabet and Panin Financial

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

The idea behind Alphabet Inc Class C and Panin Financial 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.