Correlation Between Indonesian Tobacco and Panin Financial
Can any of the company-specific risk be diversified away by investing in both Indonesian Tobacco and Panin Financial 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 Indonesian Tobacco and Panin Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indonesian Tobacco Tbk and Panin Financial Tbk, you can compare the effects of market volatilities on Indonesian Tobacco and Panin Financial 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 Indonesian Tobacco with a short position of Panin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indonesian Tobacco and Panin Financial.
Diversification Opportunities for Indonesian Tobacco and Panin Financial
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Indonesian and Panin is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Indonesian Tobacco Tbk and Panin Financial Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panin Financial Tbk and Indonesian Tobacco 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 Indonesian Tobacco Tbk are associated (or correlated) with Panin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panin Financial Tbk has no effect on the direction of Indonesian Tobacco i.e., Indonesian Tobacco and Panin Financial go up and down completely randomly.
Pair Corralation between Indonesian Tobacco and Panin Financial
Assuming the 90 days trading horizon Indonesian Tobacco Tbk is expected to generate 0.65 times more return on investment than Panin Financial. However, Indonesian Tobacco Tbk is 1.55 times less risky than Panin Financial. It trades about -0.03 of its potential returns per unit of risk. Panin Financial Tbk is currently generating about -0.16 per unit of risk. If you would invest 27,000 in Indonesian Tobacco Tbk on August 30, 2024 and sell it today you would lose (400.00) from holding Indonesian Tobacco Tbk or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indonesian Tobacco Tbk vs. Panin Financial Tbk
Performance |
| Timeline |
| Indonesian Tobacco Tbk |
| Panin Financial Tbk |
Indonesian Tobacco and Panin Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indonesian Tobacco and Panin Financial
The main advantage of trading using opposite Indonesian Tobacco and Panin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indonesian Tobacco position performs unexpectedly, Panin Financial 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 Panin Financial will offset losses from the drop in Panin Financial's long position.| Indonesian Tobacco vs. Wismilak Inti Makmur | Indonesian Tobacco vs. J Resources Asia | Indonesian Tobacco vs. Transcoal Pacific Tbk | Indonesian Tobacco vs. Garudafood Putra Putri |
| Panin Financial vs. Kawasan Industri Jababeka | Panin Financial vs. Global Mediacom Tbk | Panin Financial vs. Bank Danamon 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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