Correlation Between Bakrieland Development and Bank Pan
Can any of the company-specific risk be diversified away by investing in both Bakrieland Development 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 Bakrieland Development and Bank Pan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bakrieland Development Tbk and Bank Pan Indonesia, you can compare the effects of market volatilities on Bakrieland Development 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 Bakrieland Development with a short position of Bank Pan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bakrieland Development and Bank Pan.
Diversification Opportunities for Bakrieland Development and Bank Pan
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bakrieland and Bank is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bakrieland Development 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 Bakrieland Development 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 Bakrieland Development 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 Bakrieland Development i.e., Bakrieland Development and Bank Pan go up and down completely randomly.
Pair Corralation between Bakrieland Development and Bank Pan
Assuming the 90 days trading horizon Bakrieland Development Tbk is expected to under-perform the Bank Pan. In addition to that, Bakrieland Development is 1.73 times more volatile than Bank Pan Indonesia. It trades about -0.55 of its total potential returns per unit of risk. Bank Pan Indonesia is currently generating about -0.15 per unit of volatility. If you would invest 190,000 in Bank Pan Indonesia on August 30, 2024 and sell it today you would lose (14,000) from holding Bank Pan Indonesia or give up 7.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bakrieland Development Tbk vs. Bank Pan Indonesia
Performance |
| Timeline |
| Bakrieland Development |
| Bank Pan Indonesia |
Bakrieland Development and Bank Pan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bakrieland Development and Bank Pan
The main advantage of trading using opposite Bakrieland Development and Bank Pan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bakrieland Development 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.| Bakrieland Development vs. Bakrie Brothers Tbk | Bakrieland Development vs. Bakrie Sumatera Plantations | Bakrieland Development vs. Energi Mega Persada | Bakrieland Development vs. Darma Henwa Tbk |
| Bank Pan vs. Bank Danamon Indonesia | Bank Pan vs. Bank Cimb Niaga | Bank Pan vs. Panin Financial Tbk | Bank Pan vs. Bank Maybank Indonesia |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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