Correlation Between Kawasan Industri and Panin Financial

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

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

Diversification Opportunities for Kawasan Industri and Panin Financial

0.94

Correlation Coefficient

Kawasan Industri  Panin Financial

Almost no diversification

The 3 months correlation between Kawasan and Panin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Kawasan Industri Jababeka 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 Kawasan Industri 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 Kawasan Industri Jababeka 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 Kawasan Industri i.e., Kawasan Industri and Panin Financial go up and down completely randomly.

Pair Corralation between Kawasan Industri and Panin Financial

Assuming the 90 days trading horizon Kawasan Industri Jababeka is expected to generate 0.37 times more return on investment than Panin Financial. However, Kawasan Industri Jababeka is 2.68 times less risky than Panin Financial. It trades about -0.06 of its potential returns per unit of risk. Panin Financial Tbk is currently generating about -0.07 per unit of risk. If you would invest  18,800  in Kawasan Industri Jababeka on December 31, 2024 and sell it today you would lose (900.00) from holding Kawasan Industri Jababeka or give up 4.79% of portfolio value over 90 days.

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

Kawasan Industri Jababeka  vs.  Panin Financial Tbk

Kawasan Industri Jababeka

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kawasan Industri Jababeka has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Kawasan Industri is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

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 May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Kawasan Industri and Panin Financial

The main advantage of trading using opposite Kawasan Industri and Panin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawasan Industri 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 Kawasan Industri Jababeka 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.