Correlation Between Panca Global and Trust Finance

Can any of the company-specific risk be diversified away by investing in both Panca Global 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 Panca Global and Trust Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Panca Global Securities and Trust Finance Indonesia, you can compare the effects of market volatilities on Panca Global 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 Panca Global with a short position of Trust Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panca Global and Trust Finance.

Diversification Opportunities for Panca Global and Trust Finance

-0.37

Correlation Coefficient

Panca Global  Trust Finance

Very good diversification

The 3 months correlation between Panca and Trust is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Panca Global Securities 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 Panca Global 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 Panca Global Securities 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 Panca Global i.e., Panca Global and Trust Finance go up and down completely randomly.

Pair Corralation between Panca Global and Trust Finance

Assuming the 90 days trading horizon Panca Global Securities is expected to under-perform the Trust Finance. But the stock apears to be less risky and, when comparing its historical volatility, Panca Global Securities is 3.59 times less risky than Trust Finance. The stock trades about -0.06 of its potential returns per unit of risk. The Trust Finance Indonesia is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  45,600  in Trust Finance Indonesia on December 1, 2024 and sell it today you would earn a total of  66,400  from holding Trust Finance Indonesia or generate 145.61% return on investment over 90 days.

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

Panca Global Securities  vs.  Trust Finance Indonesia

Panca Global Securities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Panca Global Securities 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.

Trust Finance Indonesia

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trust Finance Indonesia are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Trust Finance disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Panca Global and Trust Finance

The main advantage of trading using opposite Panca Global and Trust Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panca Global 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 Panca Global Securities 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.