Correlation Between Bank Pan and Kencana Energi
Can any of the company-specific risk be diversified away by investing in both Bank Pan and Kencana Energi 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 Kencana Energi 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 Kencana Energi Lestari, you can compare the effects of market volatilities on Bank Pan and Kencana Energi 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 Kencana Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Pan and Kencana Energi.
Diversification Opportunities for Bank Pan and Kencana Energi
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Kencana is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank Pan Indonesia and Kencana Energi Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kencana Energi Lestari 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 Kencana Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kencana Energi Lestari has no effect on the direction of Bank Pan i.e., Bank Pan and Kencana Energi go up and down completely randomly.
Pair Corralation between Bank Pan and Kencana Energi
Assuming the 90 days trading horizon Bank Pan Indonesia is expected to under-perform the Kencana Energi. In addition to that, Bank Pan is 1.69 times more volatile than Kencana Energi Lestari. It trades about -0.14 of its total potential returns per unit of risk. Kencana Energi Lestari is currently generating about -0.11 per unit of volatility. If you would invest 65,500 in Kencana Energi Lestari on August 31, 2024 and sell it today you would lose (2,000) from holding Kencana Energi Lestari or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank Pan Indonesia vs. Kencana Energi Lestari
Performance |
| Timeline |
| Bank Pan Indonesia |
| Kencana Energi Lestari |
Bank Pan and Kencana Energi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Pan and Kencana Energi
The main advantage of trading using opposite Bank Pan and Kencana Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Pan position performs unexpectedly, Kencana Energi 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 Kencana Energi will offset losses from the drop in Kencana Energi'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 |
| Kencana Energi vs. PT Indonesia Kendaraan | Kencana Energi vs. Cikarang Listrindo Tbk | Kencana Energi vs. Jasa Armada Indonesia | Kencana Energi vs. Pelita Samudera Shipping |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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