Correlation Between Panin Financial and Cipta Selera

Can any of the company-specific risk be diversified away by investing in both Panin Financial and Cipta Selera 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 Cipta Selera 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 Cipta Selera Murni, you can compare the effects of market volatilities on Panin Financial and Cipta Selera 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 Cipta Selera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panin Financial and Cipta Selera.

Diversification Opportunities for Panin Financial and Cipta Selera

-0.53

Correlation Coefficient

Panin Financial  Cipta Selera

Excellent diversification

The 3 months correlation between Panin and Cipta is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Panin Financial Tbk and Cipta Selera Murni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipta Selera Murni 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 Cipta Selera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipta Selera Murni has no effect on the direction of Panin Financial i.e., Panin Financial and Cipta Selera go up and down completely randomly.

Pair Corralation between Panin Financial and Cipta Selera

Assuming the 90 days trading horizon Panin Financial Tbk is expected to under-perform the Cipta Selera. In addition to that, Panin Financial is 2.18 times more volatile than Cipta Selera Murni. It trades about -0.18 of its total potential returns per unit of risk. Cipta Selera Murni is currently generating about 0.35 per unit of volatility. If you would invest  278,000  in Cipta Selera Murni on October 11, 2024 and sell it today you would earn a total of  46,000  from holding Cipta Selera Murni or generate 16.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.44%
Values	Daily Returns

Panin Financial Tbk  vs.  Cipta Selera Murni

Panin Financial Tbk

Risk-Adjusted Performance

0 of 100

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 quite persistent forward-looking signals, Panin Financial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Cipta Selera Murni

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cipta Selera Murni are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Cipta Selera disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Panin Financial and Cipta Selera

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

The idea behind Panin Financial Tbk and Cipta Selera Murni 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.