Correlation Between Bank Permata and Clipan Finance
Can any of the company-specific risk be diversified away by investing in both Bank Permata and Clipan Finance 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 Permata and Clipan Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Permata Tbk and Clipan Finance Indonesia, you can compare the effects of market volatilities on Bank Permata and Clipan Finance 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 Permata with a short position of Clipan Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Permata and Clipan Finance.
Diversification Opportunities for Bank Permata and Clipan Finance
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Clipan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bank Permata Tbk and Clipan Finance Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clipan Finance Indonesia and Bank Permata 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 Permata Tbk are associated (or correlated) with Clipan Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clipan Finance Indonesia has no effect on the direction of Bank Permata i.e., Bank Permata and Clipan Finance go up and down completely randomly.
Pair Corralation between Bank Permata and Clipan Finance
Assuming the 90 days trading horizon Bank Permata Tbk is expected to generate 2.05 times more return on investment than Clipan Finance. However, Bank Permata is 2.05 times more volatile than Clipan Finance Indonesia. It trades about 0.67 of its potential returns per unit of risk. Clipan Finance Indonesia is currently generating about 0.01 per unit of risk. If you would invest 99,000 in Bank Permata Tbk on November 5, 2024 and sell it today you would earn a total of 33,000 from holding Bank Permata Tbk or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Permata Tbk vs. Clipan Finance Indonesia
Performance |
| Timeline |
| Bank Permata Tbk |
| Clipan Finance Indonesia |
Bank Permata and Clipan Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Permata and Clipan Finance
The main advantage of trading using opposite Bank Permata and Clipan Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Permata position performs unexpectedly, Clipan Finance 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 Clipan Finance will offset losses from the drop in Clipan Finance's long position.| Bank Permata vs. Bank Cimb Niaga | Bank Permata vs. Bank Maybank Indonesia | Bank Permata vs. Bank Danamon Indonesia | Bank Permata vs. Bank Pan Indonesia |
| Clipan Finance vs. BFI Finance Indonesia | Clipan Finance vs. Adira Dinamika Multi | Clipan Finance vs. Paninvest Tbk | Clipan Finance vs. Panin Financial Tbk |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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