Correlation Between Panin Sekuritas and Equity Development

Can any of the company-specific risk be diversified away by investing in both Panin Sekuritas and Equity Development 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 Equity Development 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 Equity Development Investment, you can compare the effects of market volatilities on Panin Sekuritas and Equity Development 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 Equity Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panin Sekuritas and Equity Development.

Diversification Opportunities for Panin Sekuritas and Equity Development

0.18

Correlation Coefficient

Panin Sekuritas  Equity Development

Average diversification

The 3 months correlation between Panin and Equity is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Panin Sekuritas Tbk and Equity Development Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Development 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 Equity Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Development has no effect on the direction of Panin Sekuritas i.e., Panin Sekuritas and Equity Development go up and down completely randomly.

Pair Corralation between Panin Sekuritas and Equity Development

Assuming the 90 days trading horizon Panin Sekuritas Tbk is expected to under-perform the Equity Development. But the stock apears to be less risky and, when comparing its historical volatility, Panin Sekuritas Tbk is 3.41 times less risky than Equity Development. The stock trades about -0.06 of its potential returns per unit of risk. The Equity Development Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,000  in Equity Development Investment on September 30, 2024 and sell it today you would earn a total of  500.00  from holding Equity Development Investment or generate 10.0% return on investment over 90 days.

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

Panin Sekuritas Tbk  vs.  Equity Development Investment

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.

Equity Development

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Development Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Equity Development may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Panin Sekuritas and Equity Development

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

The idea behind Panin Sekuritas Tbk and Equity Development Investment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.