Correlation Between Panin Financial and Hero Supermarket

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

Diversification Opportunities for Panin Financial and Hero Supermarket

0.5

Correlation Coefficient

Panin Financial  Hero Supermarket

Very weak diversification

The 3 months correlation between Panin and Hero is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Panin Financial Tbk and Hero Supermarket Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hero Supermarket Tbk 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 Hero Supermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hero Supermarket Tbk has no effect on the direction of Panin Financial i.e., Panin Financial and Hero Supermarket go up and down completely randomly.

Pair Corralation between Panin Financial and Hero Supermarket

Assuming the 90 days trading horizon Panin Financial Tbk is expected to under-perform the Hero Supermarket. But the stock apears to be less risky and, when comparing its historical volatility, Panin Financial Tbk is 1.01 times less risky than Hero Supermarket. The stock trades about -0.34 of its potential returns per unit of risk. The Hero Supermarket Tbk is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  60,500  in Hero Supermarket Tbk on October 11, 2024 and sell it today you would lose (4,500) from holding Hero Supermarket Tbk or give up 7.44% of portfolio value over 90 days.

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

Panin Financial Tbk  vs.  Hero Supermarket Tbk

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.

Hero Supermarket Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hero Supermarket 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Panin Financial and Hero Supermarket

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

The idea behind Panin Financial Tbk and Hero Supermarket Tbk 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 Stocks Directory module to find actively traded stocks across global markets.