Correlation Between Paninvest Tbk and Bank Cimb

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

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

Diversification Opportunities for Paninvest Tbk and Bank Cimb

0.82

Correlation Coefficient

Paninvest Tbk  Bank Cimb

Very poor diversification

The 3 months correlation between Paninvest and Bank is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Paninvest Tbk and Bank Cimb Niaga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Cimb Niaga and Paninvest Tbk 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 Paninvest Tbk are associated (or correlated) with Bank Cimb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Cimb Niaga has no effect on the direction of Paninvest Tbk i.e., Paninvest Tbk and Bank Cimb go up and down completely randomly.

Pair Corralation between Paninvest Tbk and Bank Cimb

Assuming the 90 days trading horizon Paninvest Tbk is expected to under-perform the Bank Cimb. In addition to that, Paninvest Tbk is 2.17 times more volatile than Bank Cimb Niaga. It trades about -0.01 of its total potential returns per unit of risk. Bank Cimb Niaga is currently generating about -0.02 per unit of volatility. If you would invest  173,000  in Bank Cimb Niaga on December 30, 2024 and sell it today you would lose (3,500) from holding Bank Cimb Niaga or give up 2.02% of portfolio value over 90 days.

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

Paninvest Tbk  vs.  Bank Cimb Niaga

Paninvest Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paninvest Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Paninvest Tbk is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bank Cimb Niaga

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Paninvest Tbk and Bank Cimb Niaga 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.