Correlation Between Panin Financial and Bank Pan

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

Diversification Opportunities for Panin Financial and Bank Pan

0.89

Correlation Coefficient

Panin Financial  Bank Pan

Very poor diversification

The 3 months correlation between Panin and Bank is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Panin Financial 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 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 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 Panin Financial i.e., Panin Financial and Bank Pan go up and down completely randomly.

Pair Corralation between Panin Financial and Bank Pan

Assuming the 90 days trading horizon Panin Financial is expected to generate 122.22 times less return on investment than Bank Pan. But when comparing it to its historical volatility, Panin Financial Tbk is 1.06 times less risky than Bank Pan. It trades about 0.0 of its potential returns per unit of risk. Bank Pan Indonesia is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  147,500  in Bank Pan Indonesia on August 31, 2024 and sell it today you would earn a total of  28,500  from holding Bank Pan Indonesia or generate 19.32% return on investment over 90 days.

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

Panin Financial Tbk  vs.  Bank Pan Indonesia

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.

Bank Pan Indonesia

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Pan Indonesia are ranked lower than 8 (%) 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 Panin Financial and Bank Pan

The main advantage of trading using opposite Panin Financial and Bank Pan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panin Financial 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 Panin Financial 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.