Correlation Between Panin Sekuritas and Trust Finance

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

Diversification Opportunities for Panin Sekuritas and Trust Finance

0.0

Correlation Coefficient

Panin Sekuritas  Trust Finance

Pay attention - limited upside

The 3 months correlation between Panin and Trust is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Panin Sekuritas Tbk and Trust Finance Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trust Finance Indonesia 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 Trust Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trust Finance Indonesia has no effect on the direction of Panin Sekuritas i.e., Panin Sekuritas and Trust Finance go up and down completely randomly.

Pair Corralation between Panin Sekuritas and Trust Finance

Assuming the 90 days trading horizon Panin Sekuritas is expected to generate 4.24 times less return on investment than Trust Finance. But when comparing it to its historical volatility, Panin Sekuritas Tbk is 2.36 times less risky than Trust Finance. It trades about 0.03 of its potential returns per unit of risk. Trust Finance Indonesia is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  43,000  in Trust Finance Indonesia on September 2, 2024 and sell it today you would earn a total of  2,200  from holding Trust Finance Indonesia or generate 5.12% return on investment over 90 days.

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

Panin Sekuritas Tbk  vs.  Trust Finance Indonesia

Panin Sekuritas Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Panin Sekuritas Tbk are ranked lower than 2 (%) 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.

Trust Finance Indonesia

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Trust Finance Indonesia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Trust Finance 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 Trust Finance

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

The idea behind Panin Sekuritas Tbk and Trust Finance Indonesia 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.