Correlation Between Bank Pan and Petrosea Tbk
Can any of the company-specific risk be diversified away by investing in both Bank Pan and Petrosea Tbk 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 Petrosea Tbk 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 Petrosea Tbk, you can compare the effects of market volatilities on Bank Pan and Petrosea Tbk 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 Petrosea Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Pan and Petrosea Tbk.
Diversification Opportunities for Bank Pan and Petrosea Tbk
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Petrosea is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank Pan Indonesia and Petrosea Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrosea 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 Petrosea Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrosea Tbk has no effect on the direction of Bank Pan i.e., Bank Pan and Petrosea Tbk go up and down completely randomly.
Pair Corralation between Bank Pan and Petrosea Tbk
Assuming the 90 days trading horizon Bank Pan is expected to generate 2.3 times less return on investment than Petrosea Tbk. But when comparing it to its historical volatility, Bank Pan Indonesia is 1.65 times less risky than Petrosea Tbk. It trades about 0.13 of its potential returns per unit of risk. Petrosea Tbk is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 765,000 in Petrosea Tbk on August 30, 2024 and sell it today you would earn a total of 1,120,000 from holding Petrosea Tbk or generate 146.41% 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. Petrosea Tbk
Performance |
| Timeline |
| Bank Pan Indonesia |
| Petrosea Tbk |
Bank Pan and Petrosea Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Pan and Petrosea Tbk
The main advantage of trading using opposite Bank Pan and Petrosea Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Pan position performs unexpectedly, Petrosea Tbk 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 Petrosea Tbk will offset losses from the drop in Petrosea Tbk'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 |
| Petrosea Tbk vs. Indika Energy Tbk | Petrosea Tbk vs. Harum Energy Tbk | Petrosea Tbk vs. Indo Tambangraya Megah | Petrosea Tbk vs. Gajah Tunggal 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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