Correlation Between Panin Financial and Paninvest Tbk

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

Diversification Opportunities for Panin Financial and Paninvest Tbk

0.88

Correlation Coefficient

Panin Financial  Paninvest Tbk

Very poor diversification

The 3 months correlation between Panin and Paninvest is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Panin Financial Tbk and Paninvest Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paninvest 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 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 Panin Financial i.e., Panin Financial and Paninvest Tbk go up and down completely randomly.

Pair Corralation between Panin Financial and Paninvest Tbk

Assuming the 90 days trading horizon Panin Financial is expected to generate 1.66 times less return on investment than Paninvest Tbk. But when comparing it to its historical volatility, Panin Financial Tbk is 1.01 times less risky than Paninvest Tbk. It trades about 0.06 of its potential returns per unit of risk. Paninvest Tbk is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  94,000  in Paninvest Tbk on September 4, 2024 and sell it today you would earn a total of  16,000  from holding Paninvest Tbk or generate 17.02% 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.  Paninvest Tbk

Panin Financial Tbk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Panin Financial Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Panin Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Panin Financial and Paninvest Tbk

The main advantage of trading using opposite Panin Financial and Paninvest Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panin Financial 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 Panin Financial Tbk 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.