Correlation Between Jakarta Int and Panin Financial

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

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

Diversification Opportunities for Jakarta Int and Panin Financial

0.2

Correlation Coefficient

Jakarta Int  Panin Financial

Modest diversification

The 3 months correlation between Jakarta and Panin is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Jakarta Int Hotels 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 Jakarta Int 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 Jakarta Int Hotels 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 Jakarta Int i.e., Jakarta Int and Panin Financial go up and down completely randomly.

Pair Corralation between Jakarta Int and Panin Financial

Assuming the 90 days trading horizon Jakarta Int Hotels is expected to generate 3.09 times more return on investment than Panin Financial. However, Jakarta Int is 3.09 times more volatile than Panin Financial Tbk. It trades about 0.43 of its potential returns per unit of risk. Panin Financial Tbk is currently generating about 0.02 per unit of risk. If you would invest  33,200  in Jakarta Int Hotels on September 2, 2024 and sell it today you would earn a total of  263,800  from holding Jakarta Int Hotels or generate 794.58% return on investment over 90 days.

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

Jakarta Int Hotels  vs.  Panin Financial Tbk

Jakarta Int Hotels

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Jakarta Int Hotels are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Jakarta Int disclosed solid returns over the last few months and may actually be approaching a breakup point.

Panin Financial Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Panin Financial Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Panin Financial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Jakarta Int and Panin Financial

The main advantage of trading using opposite Jakarta Int and Panin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jakarta Int 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 Jakarta Int Hotels 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.