Correlation Between Panin Financial and Panin Sekuritas

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

Diversification Opportunities for Panin Financial and Panin Sekuritas

0.66

Correlation Coefficient

Panin Financial  Panin Sekuritas

Poor diversification

The 3 months correlation between Panin and Panin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Panin Financial Tbk and Panin Sekuritas Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panin Sekuritas 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 Panin Sekuritas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panin Sekuritas Tbk has no effect on the direction of Panin Financial i.e., Panin Financial and Panin Sekuritas go up and down completely randomly.

Pair Corralation between Panin Financial and Panin Sekuritas

Assuming the 90 days trading horizon Panin Financial Tbk is expected to under-perform the Panin Sekuritas. In addition to that, Panin Financial is 3.43 times more volatile than Panin Sekuritas Tbk. It trades about -0.06 of its total potential returns per unit of risk. Panin Sekuritas Tbk is currently generating about -0.16 per unit of volatility. If you would invest  160,500  in Panin Sekuritas Tbk on December 30, 2024 and sell it today you would lose (14,500) from holding Panin Sekuritas Tbk or give up 9.03% of portfolio value over 90 days.

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

Panin Financial Tbk  vs.  Panin Sekuritas Tbk

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.

Panin Sekuritas Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Panin Sekuritas Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Panin Financial and Panin Sekuritas

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

The idea behind Panin Financial Tbk and Panin Sekuritas 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.