Correlation Between Tempo Inti and Pan Brothers

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

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

Diversification Opportunities for Tempo Inti and Pan Brothers

-0.68

Correlation Coefficient

Tempo Inti  Pan Brothers

Excellent diversification

The 3 months correlation between Tempo and Pan is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tempo Inti Media and Pan Brothers Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Brothers Tbk and Tempo Inti 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 Tempo Inti Media are associated (or correlated) with Pan Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Brothers Tbk has no effect on the direction of Tempo Inti i.e., Tempo Inti and Pan Brothers go up and down completely randomly.

Pair Corralation between Tempo Inti and Pan Brothers

Assuming the 90 days trading horizon Tempo Inti Media is expected to under-perform the Pan Brothers. In addition to that, Tempo Inti is 3.18 times more volatile than Pan Brothers Tbk. It trades about -0.04 of its total potential returns per unit of risk. Pan Brothers Tbk is currently generating about 0.14 per unit of volatility. If you would invest  1,900  in Pan Brothers Tbk on September 30, 2024 and sell it today you would earn a total of  400.00  from holding Pan Brothers Tbk or generate 21.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Tempo Inti Media  vs.  Pan Brothers Tbk

Tempo Inti Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tempo Inti Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pan Brothers Tbk

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pan Brothers Tbk are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pan Brothers disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tempo Inti and Pan Brothers

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

The idea behind Tempo Inti Media and Pan Brothers 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.