Correlation Between Bank Pan and PT Dewi
Can any of the company-specific risk be diversified away by investing in both Bank Pan and PT Dewi 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 PT Dewi 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 PT Dewi Shri, you can compare the effects of market volatilities on Bank Pan and PT Dewi 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 PT Dewi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Pan and PT Dewi.
Diversification Opportunities for Bank Pan and PT Dewi
Poor diversification
The 3 months correlation between Bank and DEWI is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank Pan Indonesia and PT Dewi Shri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Dewi Shri 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 PT Dewi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Dewi Shri has no effect on the direction of Bank Pan i.e., Bank Pan and PT Dewi go up and down completely randomly.
Pair Corralation between Bank Pan and PT Dewi
Assuming the 90 days trading horizon Bank Pan Indonesia is expected to under-perform the PT Dewi. In addition to that, Bank Pan is 1.86 times more volatile than PT Dewi Shri. It trades about -0.17 of its total potential returns per unit of risk. PT Dewi Shri is currently generating about -0.04 per unit of volatility. If you would invest 8,500 in PT Dewi Shri on August 31, 2024 and sell it today you would lose (100.00) from holding PT Dewi Shri or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Pan Indonesia vs. PT Dewi Shri
Performance |
| Timeline |
| Bank Pan Indonesia |
| PT Dewi Shri |
Bank Pan and PT Dewi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Pan and PT Dewi
The main advantage of trading using opposite Bank Pan and PT Dewi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Pan position performs unexpectedly, PT Dewi 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 PT Dewi will offset losses from the drop in PT Dewi's 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 |
| PT Dewi vs. Habco Trans Maritima | PT Dewi vs. PT Cilacap Samudera | PT Dewi vs. PT Sari Kreasi | PT Dewi vs. Autopedia Sukses Lestari |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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