Correlation Between Trust Finance and Panin Sekuritas

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

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

Diversification Opportunities for Trust Finance and Panin Sekuritas

0.0

Correlation Coefficient

Trust Finance  Panin Sekuritas

Pay attention - limited upside

The 3 months correlation between Trust and Panin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Trust Finance Indonesia 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 Trust Finance 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 Trust Finance Indonesia 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 Trust Finance i.e., Trust Finance and Panin Sekuritas go up and down completely randomly.

Pair Corralation between Trust Finance and Panin Sekuritas

Assuming the 90 days trading horizon Trust Finance Indonesia is expected to generate 2.36 times more return on investment than Panin Sekuritas. However, Trust Finance is 2.36 times more volatile than Panin Sekuritas Tbk. It trades about 0.05 of its potential returns per unit of risk. Panin Sekuritas Tbk is currently generating about 0.03 per unit of risk. If you would invest  43,000  in Trust Finance Indonesia on September 2, 2024 and sell it today you would earn a total of  2,200  from holding Trust Finance Indonesia or generate 5.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Trust Finance Indonesia  vs.  Panin Sekuritas Tbk

Trust Finance Indonesia

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Trust Finance Indonesia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Trust Finance is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Panin Sekuritas Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Panin Sekuritas Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Panin Sekuritas is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Trust Finance and Panin Sekuritas

The main advantage of trading using opposite Trust Finance and Panin Sekuritas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trust Finance 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 Trust Finance Indonesia 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.