Correlation Between Bank Pan and Bakrie Brothers
Can any of the company-specific risk be diversified away by investing in both Bank Pan and Bakrie Brothers 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 Pan and Bakrie Brothers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Pan Indonesia and Bakrie Brothers Tbk, you can compare the effects of market volatilities on Bank Pan and Bakrie Brothers 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 Pan with a short position of Bakrie Brothers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Pan and Bakrie Brothers.
Diversification Opportunities for Bank Pan and Bakrie Brothers
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Bakrie is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bank Pan Indonesia and Bakrie Brothers Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakrie Brothers Tbk and Bank Pan 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 Pan Indonesia are associated (or correlated) with Bakrie Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakrie Brothers Tbk has no effect on the direction of Bank Pan i.e., Bank Pan and Bakrie Brothers go up and down completely randomly.
Pair Corralation between Bank Pan and Bakrie Brothers
Assuming the 90 days trading horizon Bank Pan Indonesia is expected to generate 0.56 times more return on investment than Bakrie Brothers. However, Bank Pan Indonesia is 1.78 times less risky than Bakrie Brothers. It trades about 0.13 of its potential returns per unit of risk. Bakrie Brothers Tbk is currently generating about 0.05 per unit of risk. If you would invest 118,000 in Bank Pan Indonesia on August 30, 2024 and sell it today you would earn a total of 58,000 from holding Bank Pan Indonesia or generate 49.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Pan Indonesia vs. Bakrie Brothers Tbk
Performance |
| Timeline |
| Bank Pan Indonesia |
| Bakrie Brothers Tbk |
Bank Pan and Bakrie Brothers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Pan and Bakrie Brothers
The main advantage of trading using opposite Bank Pan and Bakrie Brothers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Pan position performs unexpectedly, Bakrie Brothers 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 Bakrie Brothers will offset losses from the drop in Bakrie Brothers' long position.| Bank Pan vs. Bank Danamon Indonesia | Bank Pan vs. Bank Cimb Niaga | Bank Pan vs. Panin Financial Tbk | Bank Pan vs. Bank Maybank Indonesia |
| Bakrie Brothers vs. Bakrieland Development Tbk | Bakrie Brothers vs. Bakrie Sumatera Plantations | Bakrie Brothers vs. Energi Mega Persada | Bakrie Brothers vs. Darma Henwa 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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