Correlation Between Maskapai Reasuransi and Panin Financial

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

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

Diversification Opportunities for Maskapai Reasuransi and Panin Financial

-0.53

Correlation Coefficient

Maskapai Reasuransi  Panin Financial

Excellent diversification

The 3 months correlation between Maskapai and Panin is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Maskapai Reasuransi Indonesia 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 Maskapai Reasuransi 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 Maskapai Reasuransi Indonesia 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 Maskapai Reasuransi i.e., Maskapai Reasuransi and Panin Financial go up and down completely randomly.

Pair Corralation between Maskapai Reasuransi and Panin Financial

Assuming the 90 days trading horizon Maskapai Reasuransi Indonesia is expected to under-perform the Panin Financial. But the stock apears to be less risky and, when comparing its historical volatility, Maskapai Reasuransi Indonesia is 3.13 times less risky than Panin Financial. The stock trades about -0.23 of its potential returns per unit of risk. The Panin Financial Tbk is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  49,800  in Panin Financial Tbk on September 13, 2024 and sell it today you would lose (1,600) from holding Panin Financial Tbk or give up 3.21% of portfolio value over 90 days.

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

Maskapai Reasuransi Indonesia  vs.  Panin Financial Tbk

Maskapai Reasuransi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maskapai Reasuransi 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.

Panin Financial Tbk

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Maskapai Reasuransi and Panin Financial

The main advantage of trading using opposite Maskapai Reasuransi and Panin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maskapai Reasuransi 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 Maskapai Reasuransi Indonesia 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.