Correlation Between Bank Artha and Bank Pan

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

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

Diversification Opportunities for Bank Artha and Bank Pan

0.77

Correlation Coefficient

Bank Artha  Bank Pan

Poor diversification

The 3 months correlation between Bank and Bank is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bank Artha Graha and Bank Pan Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Pan Indonesia and Bank Artha 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 Artha Graha are associated (or correlated) with Bank Pan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Pan Indonesia has no effect on the direction of Bank Artha i.e., Bank Artha and Bank Pan go up and down completely randomly.

Pair Corralation between Bank Artha and Bank Pan

Assuming the 90 days trading horizon Bank Artha Graha is expected to under-perform the Bank Pan. In addition to that, Bank Artha is 2.28 times more volatile than Bank Pan Indonesia. It trades about -0.05 of its total potential returns per unit of risk. Bank Pan Indonesia is currently generating about -0.04 per unit of volatility. If you would invest  186,000  in Bank Pan Indonesia on December 29, 2024 and sell it today you would lose (20,000) from holding Bank Pan Indonesia or give up 10.75% of portfolio value over 90 days.

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

Bank Artha Graha  vs.  Bank Pan Indonesia

Bank Artha Graha

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Artha Graha 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.

Bank Pan Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Pan Indonesia 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.

Pair Trading with Bank Artha and Bank Pan

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

The idea behind Bank Artha Graha and Bank Pan Indonesia 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.