Correlation Between Bank Pan and Elang Mahkota
Can any of the company-specific risk be diversified away by investing in both Bank Pan and Elang Mahkota 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 Elang Mahkota 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 Elang Mahkota Teknologi, you can compare the effects of market volatilities on Bank Pan and Elang Mahkota 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 Elang Mahkota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Pan and Elang Mahkota.
Diversification Opportunities for Bank Pan and Elang Mahkota
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Elang is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bank Pan Indonesia and Elang Mahkota Teknologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elang Mahkota Teknologi 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 Elang Mahkota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elang Mahkota Teknologi has no effect on the direction of Bank Pan i.e., Bank Pan and Elang Mahkota go up and down completely randomly.
Pair Corralation between Bank Pan and Elang Mahkota
Assuming the 90 days trading horizon Bank Pan Indonesia is expected to under-perform the Elang Mahkota. But the stock apears to be less risky and, when comparing its historical volatility, Bank Pan Indonesia is 1.47 times less risky than Elang Mahkota. The stock trades about -0.15 of its potential returns per unit of risk. The Elang Mahkota Teknologi is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 48,200 in Elang Mahkota Teknologi on August 27, 2024 and sell it today you would earn a total of 200.00 from holding Elang Mahkota Teknologi or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Pan Indonesia vs. Elang Mahkota Teknologi
Performance |
| Timeline |
| Bank Pan Indonesia |
| Elang Mahkota Teknologi |
Bank Pan and Elang Mahkota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Pan and Elang Mahkota
The main advantage of trading using opposite Bank Pan and Elang Mahkota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Pan position performs unexpectedly, Elang Mahkota 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 Elang Mahkota will offset losses from the drop in Elang Mahkota's long position.| Bank Pan vs. Paninvest Tbk | Bank Pan vs. Wahana Ottomitra Multiartha | Bank Pan vs. Lenox Pasifik Investama |
| Elang Mahkota vs. Mnc Land Tbk | Elang Mahkota vs. MNC Vision Networks | Elang Mahkota vs. Medikaloka Hermina PT |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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