Correlation Between Paninvest Tbk and Bank Pan

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

Diversification Opportunities for Paninvest Tbk and Bank Pan

0.94

Correlation Coefficient

Paninvest Tbk  Bank Pan

Almost no diversification

The 3 months correlation between Paninvest and Bank is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Paninvest Tbk and Bank Pan Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Pan Indonesia 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 Pan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Pan Indonesia has no effect on the direction of Paninvest Tbk i.e., Paninvest Tbk and Bank Pan go up and down completely randomly.

Pair Corralation between Paninvest Tbk and Bank Pan

Assuming the 90 days trading horizon Paninvest Tbk is expected to generate 1.71 times less return on investment than Bank Pan. But when comparing it to its historical volatility, Paninvest Tbk is 1.06 times less risky than Bank Pan. It trades about 0.12 of its potential returns per unit of risk. Bank Pan Indonesia is currently generating about 0.19 of returns per unit of risk over similar time horizon. 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 Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Paninvest Tbk  vs.  Bank Pan Indonesia

Paninvest Tbk

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paninvest Tbk are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Paninvest Tbk disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Paninvest Tbk and Bank Pan

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

The idea behind Paninvest Tbk and Bank Pan 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.