Correlation Between Trimegah Securities and Bank Pan

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

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

Diversification Opportunities for Trimegah Securities and Bank Pan

0.58

Correlation Coefficient

Trimegah Securities  Bank Pan

Very weak diversification

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

Pair Corralation between Trimegah Securities and Bank Pan

Assuming the 90 days trading horizon Trimegah Securities is expected to generate 1.18 times less return on investment than Bank Pan. But when comparing it to its historical volatility, Trimegah Securities Tbk is 1.35 times less risky than Bank Pan. It trades about 0.22 of its potential returns per unit of risk. Bank Pan Indonesia is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  140,000  in Bank Pan Indonesia on September 4, 2024 and sell it today you would earn a total of  57,500  from holding Bank Pan Indonesia or generate 41.07% return on investment over 90 days.

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

Trimegah Securities Tbk  vs.  Bank Pan Indonesia

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.

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.

Pair Trading with Trimegah Securities and Bank Pan

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

The idea behind Trimegah Securities Tbk and Bank Pan Indonesia 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.