Correlation Between Panin Sekuritas and Bank Central

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

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

Diversification Opportunities for Panin Sekuritas and Bank Central

0.29

Correlation Coefficient

Panin Sekuritas  Bank Central

Modest diversification

The 3 months correlation between Panin and Bank is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Panin Sekuritas Tbk and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia and Panin Sekuritas 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 Panin Sekuritas Tbk are associated (or correlated) with Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of Panin Sekuritas i.e., Panin Sekuritas and Bank Central go up and down completely randomly.

Pair Corralation between Panin Sekuritas and Bank Central

Assuming the 90 days trading horizon Panin Sekuritas Tbk is expected to under-perform the Bank Central. But the stock apears to be less risky and, when comparing its historical volatility, Panin Sekuritas Tbk is 1.63 times less risky than Bank Central. The stock trades about -0.06 of its potential returns per unit of risk. The Bank Central Asia is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  985,087  in Bank Central Asia on September 30, 2024 and sell it today you would lose (7,587) from holding Bank Central Asia or give up 0.77% of portfolio value over 90 days.

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

Panin Sekuritas Tbk  vs.  Bank Central Asia

Panin Sekuritas Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Panin Sekuritas Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Bank Central Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Central Asia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bank Central 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 Panin Sekuritas and Bank Central

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

The idea behind Panin Sekuritas Tbk and Bank Central Asia 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.