Correlation Between Pan Brothers and Delta Djakarta

Can any of the company-specific risk be diversified away by investing in both Pan Brothers and Delta Djakarta 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 Pan Brothers and Delta Djakarta into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Pan Brothers and Delta Djakarta

-0.86

Correlation Coefficient

Pan Brothers  Delta Djakarta

Pay attention - limited upside

The 3 months correlation between Pan and Delta is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pan Brothers Tbk and Delta Djakarta Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Djakarta Tbk and Pan Brothers 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 Pan Brothers Tbk are associated (or correlated) with Delta Djakarta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Djakarta Tbk has no effect on the direction of Pan Brothers i.e., Pan Brothers and Delta Djakarta go up and down completely randomly.

Pair Corralation between Pan Brothers and Delta Djakarta

Assuming the 90 days trading horizon Pan Brothers Tbk is expected to generate 2.24 times more return on investment than Delta Djakarta. However, Pan Brothers is 2.24 times more volatile than Delta Djakarta Tbk. It trades about 0.06 of its potential returns per unit of risk. Delta Djakarta Tbk is currently generating about -0.13 per unit of risk. If you would invest  2,100  in Pan Brothers Tbk on September 3, 2024 and sell it today you would earn a total of  200.00  from holding Pan Brothers Tbk or generate 9.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Pan Brothers Tbk  vs.  Delta Djakarta Tbk

Pan Brothers Tbk

Risk-Adjusted Performance

5 of 100

Modest

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

Delta Djakarta Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delta Djakarta Tbk 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.

Pair Trading with Pan Brothers and Delta Djakarta

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

The idea behind Pan Brothers Tbk and Delta Djakarta 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.