Correlation Between Bank Pan and Ifishdeco

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

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

Diversification Opportunities for Bank Pan and Ifishdeco

-0.49

Correlation Coefficient

Bank Pan  Ifishdeco

Very good diversification

The 3 months correlation between Bank and Ifishdeco is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bank Pan Indonesia and Ifishdeco PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ifishdeco PT and Bank Pan 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 Bank Pan Indonesia are associated (or correlated) with Ifishdeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ifishdeco PT has no effect on the direction of Bank Pan i.e., Bank Pan and Ifishdeco go up and down completely randomly.

Pair Corralation between Bank Pan and Ifishdeco

Assuming the 90 days trading horizon Bank Pan Indonesia is expected to generate 0.75 times more return on investment than Ifishdeco. However, Bank Pan Indonesia is 1.33 times less risky than Ifishdeco. It trades about 0.19 of its potential returns per unit of risk. Ifishdeco PT is currently generating about 0.01 per unit of risk. If you would invest  139,500  in Bank Pan Indonesia on September 5, 2024 and sell it today you would earn a total of  58,000  from holding Bank Pan Indonesia or generate 41.58% return on investment over 90 days.

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

Bank Pan Indonesia  vs.  Ifishdeco PT

Bank Pan Indonesia

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Pan Indonesia are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Pan disclosed solid returns over the last few months and may actually be approaching a breakup point.

Ifishdeco PT

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Bank Pan Indonesia and Ifishdeco PT 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.