Correlation Between Bank Nationalnobu and Panin Sekuritas

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

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

Diversification Opportunities for Bank Nationalnobu and Panin Sekuritas

0.74

Correlation Coefficient

Bank Nationalnobu  Panin Sekuritas

Poor diversification

The 3 months correlation between Bank and Panin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Nationalnobu Tbk and Panin Sekuritas Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panin Sekuritas Tbk and Bank Nationalnobu 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 Nationalnobu Tbk are associated (or correlated) with Panin Sekuritas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panin Sekuritas Tbk has no effect on the direction of Bank Nationalnobu i.e., Bank Nationalnobu and Panin Sekuritas go up and down completely randomly.

Pair Corralation between Bank Nationalnobu and Panin Sekuritas

Assuming the 90 days trading horizon Bank Nationalnobu Tbk is expected to generate 2.91 times more return on investment than Panin Sekuritas. However, Bank Nationalnobu is 2.91 times more volatile than Panin Sekuritas Tbk. It trades about 0.06 of its potential returns per unit of risk. Panin Sekuritas Tbk is currently generating about 0.02 per unit of risk. If you would invest  63,000  in Bank Nationalnobu Tbk on September 3, 2024 and sell it today you would earn a total of  5,000  from holding Bank Nationalnobu Tbk or generate 7.94% return on investment over 90 days.

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

Bank Nationalnobu Tbk  vs.  Panin Sekuritas Tbk

Bank Nationalnobu Tbk

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Nationalnobu Tbk are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Nationalnobu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Panin Sekuritas Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Panin Sekuritas Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Panin Sekuritas 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 Bank Nationalnobu and Panin Sekuritas

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

The idea behind Bank Nationalnobu Tbk and Panin Sekuritas 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.