Correlation Between Bank Pembangunan and Paninvest Tbk

Can any of the company-specific risk be diversified away by investing in both Bank Pembangunan and Paninvest Tbk 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 Bank Pembangunan and Paninvest Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank Pembangunan Daerah and Paninvest Tbk, you can compare the effects of market volatilities on Bank Pembangunan and Paninvest Tbk 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 Bank Pembangunan with a short position of Paninvest Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Pembangunan and Paninvest Tbk.

Diversification Opportunities for Bank Pembangunan and Paninvest Tbk

0.72

Correlation Coefficient

Bank Pembangunan  Paninvest Tbk

Poor diversification

The 3 months correlation between Bank and Paninvest is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bank Pembangunan Daerah and Paninvest Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paninvest Tbk and Bank Pembangunan 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 Bank Pembangunan Daerah are associated (or correlated) with Paninvest Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paninvest Tbk has no effect on the direction of Bank Pembangunan i.e., Bank Pembangunan and Paninvest Tbk go up and down completely randomly.

Pair Corralation between Bank Pembangunan and Paninvest Tbk

Assuming the 90 days trading horizon Bank Pembangunan Daerah is expected to generate 1.78 times more return on investment than Paninvest Tbk. However, Bank Pembangunan is 1.78 times more volatile than Paninvest Tbk. It trades about 0.12 of its potential returns per unit of risk. Paninvest Tbk is currently generating about 0.09 per unit of risk. If you would invest  2,500  in Bank Pembangunan Daerah on September 14, 2024 and sell it today you would earn a total of  900.00  from holding Bank Pembangunan Daerah or generate 36.0% return on investment over 90 days.

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

Bank Pembangunan Daerah  vs.  Paninvest Tbk

Bank Pembangunan Daerah

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Pembangunan Daerah are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Pembangunan disclosed solid returns over the last few months and may actually be approaching a breakup point.

Paninvest Tbk

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paninvest Tbk are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Paninvest Tbk disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Pembangunan and Paninvest Tbk

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

The idea behind Bank Pembangunan Daerah and Paninvest 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.