Correlation Between Cita Mineral and PAM Mineral
Can any of the company-specific risk be diversified away by investing in both Cita Mineral 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 Cita Mineral and PAM Mineral into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cita Mineral Investindo and PAM Mineral Tbk, you can compare the effects of market volatilities on Cita Mineral 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 Cita Mineral with a short position of PAM Mineral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cita Mineral and PAM Mineral.
Diversification Opportunities for Cita Mineral and PAM Mineral
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cita and PAM is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cita Mineral Investindo 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 Cita Mineral 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 Cita Mineral Investindo 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 Cita Mineral i.e., Cita Mineral and PAM Mineral go up and down completely randomly.
Pair Corralation between Cita Mineral and PAM Mineral
Assuming the 90 days trading horizon Cita Mineral Investindo is expected to generate 2.04 times more return on investment than PAM Mineral. However, Cita Mineral is 2.04 times more volatile than PAM Mineral Tbk. It trades about 0.25 of its potential returns per unit of risk. PAM Mineral Tbk is currently generating about 0.15 per unit of risk. If you would invest 260,000 in Cita Mineral Investindo on September 2, 2024 and sell it today you would earn a total of 85,000 from holding Cita Mineral Investindo or generate 32.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cita Mineral Investindo vs. PAM Mineral Tbk
Performance |
| Timeline |
| Cita Mineral Investindo |
| PAM Mineral Tbk |
Cita Mineral and PAM Mineral Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cita Mineral and PAM Mineral
The main advantage of trading using opposite Cita Mineral and PAM Mineral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cita Mineral 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.| Cita Mineral vs. Perusahaan Gas Negara | Cita Mineral vs. Telkom Indonesia Tbk | Cita Mineral vs. Mitra Pinasthika Mustika | Cita Mineral vs. Jakarta Int Hotels |
| PAM Mineral vs. Merdeka Copper Gold | PAM Mineral vs. Aneka Tambang Persero | PAM Mineral vs. Bumi Resources Minerals | PAM Mineral vs. Timah Persero 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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