Correlation Between Bank Pan and Trimegah Securities

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

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

Diversification Opportunities for Bank Pan and Trimegah Securities

0.58

Correlation Coefficient

Bank Pan  Trimegah Securities

Very weak diversification

The 3 months correlation between Bank and Trimegah is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bank Pan Indonesia and Trimegah Securities Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimegah Securities Tbk and Bank Pan 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 Pan Indonesia are associated (or correlated) with Trimegah Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimegah Securities Tbk has no effect on the direction of Bank Pan i.e., Bank Pan and Trimegah Securities go up and down completely randomly.

Pair Corralation between Bank Pan and Trimegah Securities

Assuming the 90 days trading horizon Bank Pan Indonesia is expected to generate 1.11 times more return on investment than Trimegah Securities. However, Bank Pan is 1.11 times more volatile than Trimegah Securities Tbk. It trades about 0.11 of its potential returns per unit of risk. Trimegah Securities Tbk is currently generating about 0.08 per unit of risk. If you would invest  112,500  in Bank Pan Indonesia on September 4, 2024 and sell it today you would earn a total of  85,000  from holding Bank Pan Indonesia or generate 75.56% return on investment over 90 days.

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

Bank Pan Indonesia  vs.  Trimegah Securities Tbk

Bank Pan Indonesia

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Pan Indonesia are ranked lower than 14 (%) 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.

Trimegah Securities Tbk

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trimegah Securities Tbk are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Trimegah Securities disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Pan and Trimegah Securities

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

The idea behind Bank Pan Indonesia and Trimegah Securities 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.