Correlation Between Panin Financial and Buana Listya

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

By analyzing existing cross correlation between Panin Financial Tbk and Buana Listya Tama, you can compare the effects of market volatilities on Panin Financial and Buana Listya 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 Panin Financial with a short position of Buana Listya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panin Financial and Buana Listya.

Diversification Opportunities for Panin Financial and Buana Listya

-0.61

Correlation Coefficient

Panin Financial  Buana Listya

Excellent diversification

The 3 months correlation between Panin and Buana is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Panin Financial Tbk and Buana Listya Tama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buana Listya Tama and Panin Financial 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 Panin Financial Tbk are associated (or correlated) with Buana Listya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buana Listya Tama has no effect on the direction of Panin Financial i.e., Panin Financial and Buana Listya go up and down completely randomly.

Pair Corralation between Panin Financial and Buana Listya

Assuming the 90 days trading horizon Panin Financial Tbk is expected to under-perform the Buana Listya. But the stock apears to be less risky and, when comparing its historical volatility, Panin Financial Tbk is 1.22 times less risky than Buana Listya. The stock trades about -0.3 of its potential returns per unit of risk. The Buana Listya Tama is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  12,200  in Buana Listya Tama on December 5, 2024 and sell it today you would earn a total of  1,400  from holding Buana Listya Tama or generate 11.48% return on investment over 90 days.

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

Panin Financial Tbk  vs.  Buana Listya Tama

Panin Financial Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Panin Financial Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Buana Listya Tama

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Buana Listya Tama are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Buana Listya disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Panin Financial and Buana Listya

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

The idea behind Panin Financial Tbk and Buana Listya Tama 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.