Correlation Between Aneka Tambang and PAM Mineral
Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and PAM Mineral 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 Aneka Tambang and PAM Mineral into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aneka Tambang Persero and PAM Mineral Tbk, you can compare the effects of market volatilities on Aneka Tambang and PAM Mineral 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 Aneka Tambang with a short position of PAM Mineral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and PAM Mineral.
Diversification Opportunities for Aneka Tambang and PAM Mineral
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aneka and PAM is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Persero and PAM Mineral Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAM Mineral Tbk and Aneka Tambang 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 Aneka Tambang Persero are associated (or correlated) with PAM Mineral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAM Mineral Tbk has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and PAM Mineral go up and down completely randomly.
Pair Corralation between Aneka Tambang and PAM Mineral
Assuming the 90 days trading horizon Aneka Tambang Persero is expected to under-perform the PAM Mineral. But the stock apears to be less risky and, when comparing its historical volatility, Aneka Tambang Persero is 1.0 times less risky than PAM Mineral. The stock trades about -0.15 of its potential returns per unit of risk. The PAM Mineral Tbk is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 27,200 in PAM Mineral Tbk on August 29, 2024 and sell it today you would earn a total of 3,400 from holding PAM Mineral Tbk or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aneka Tambang Persero vs. PAM Mineral Tbk
Performance |
| Timeline |
| Aneka Tambang Persero |
| PAM Mineral Tbk |
Aneka Tambang and PAM Mineral Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aneka Tambang and PAM Mineral
The main advantage of trading using opposite Aneka Tambang and PAM Mineral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Tambang position performs unexpectedly, PAM Mineral 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 PAM Mineral will offset losses from the drop in PAM Mineral's long position.| Aneka Tambang vs. Perusahaan Gas Negara | Aneka Tambang vs. Vale Indonesia Tbk | Aneka Tambang vs. Bukit Asam Tbk | Aneka Tambang vs. Telkom Indonesia Tbk |
| PAM Mineral vs. Archi Indonesia Tbk | PAM Mineral vs. Bumi Resources Minerals | PAM Mineral vs. Bank Panin Syariah | PAM Mineral vs. Central Omega Resources |
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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