Correlation Between Bank Permata and Panca Budi
Can any of the company-specific risk be diversified away by investing in both Bank Permata and Panca Budi 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 Panca Budi 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 Panca Budi Idaman, you can compare the effects of market volatilities on Bank Permata and Panca Budi 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 Panca Budi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Permata and Panca Budi.
Diversification Opportunities for Bank Permata and Panca Budi
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Panca is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bank Permata Tbk and Panca Budi Idaman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panca Budi Idaman 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 Panca Budi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panca Budi Idaman has no effect on the direction of Bank Permata i.e., Bank Permata and Panca Budi go up and down completely randomly.
Pair Corralation between Bank Permata and Panca Budi
Assuming the 90 days trading horizon Bank Permata is expected to generate 53.15 times less return on investment than Panca Budi. But when comparing it to its historical volatility, Bank Permata Tbk is 19.57 times less risky than Panca Budi. It trades about 0.02 of its potential returns per unit of risk. Panca Budi Idaman is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 34,948 in Panca Budi Idaman on September 1, 2024 and sell it today you would earn a total of 17,052 from holding Panca Budi Idaman or generate 48.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Permata Tbk vs. Panca Budi Idaman
Performance |
| Timeline |
| Bank Permata Tbk |
| Panca Budi Idaman |
Bank Permata and Panca Budi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Permata and Panca Budi
The main advantage of trading using opposite Bank Permata and Panca Budi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Permata position performs unexpectedly, Panca Budi 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 Panca Budi will offset losses from the drop in Panca Budi'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 |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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