Correlation Between PAM Mineral and PT Cilacap
Can any of the company-specific risk be diversified away by investing in both PAM Mineral and PT Cilacap 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 PAM Mineral and PT Cilacap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PAM Mineral Tbk and PT Cilacap Samudera, you can compare the effects of market volatilities on PAM Mineral and PT Cilacap 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 PAM Mineral with a short position of PT Cilacap. Check out your portfolio center. Please also check ongoing floating volatility patterns of PAM Mineral and PT Cilacap.
Diversification Opportunities for PAM Mineral and PT Cilacap
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between PAM and ASHA is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding PAM Mineral Tbk and PT Cilacap Samudera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Cilacap Samudera and PAM 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 PAM Mineral Tbk are associated (or correlated) with PT Cilacap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Cilacap Samudera has no effect on the direction of PAM Mineral i.e., PAM Mineral and PT Cilacap go up and down completely randomly.
Pair Corralation between PAM Mineral and PT Cilacap
Assuming the 90 days trading horizon PAM Mineral Tbk is expected to generate 0.71 times more return on investment than PT Cilacap. However, PAM Mineral Tbk is 1.4 times less risky than PT Cilacap. It trades about 0.1 of its potential returns per unit of risk. PT Cilacap Samudera is currently generating about -0.1 per unit of risk. If you would invest 19,182 in PAM Mineral Tbk on September 3, 2024 and sell it today you would earn a total of 10,818 from holding PAM Mineral Tbk or generate 56.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PAM Mineral Tbk vs. PT Cilacap Samudera
Performance |
| Timeline |
| PAM Mineral Tbk |
| PT Cilacap Samudera |
PAM Mineral and PT Cilacap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PAM Mineral and PT Cilacap
The main advantage of trading using opposite PAM Mineral and PT Cilacap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PAM Mineral position performs unexpectedly, PT Cilacap 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 PT Cilacap will offset losses from the drop in PT Cilacap's long position.| PAM Mineral vs. Archi Indonesia Tbk | PAM Mineral vs. Bumi Resources Minerals | PAM Mineral vs. Bank Panin Syariah | PAM Mineral vs. Central Omega Resources |
| PT Cilacap vs. PT Dewi Shri | PT Cilacap vs. Adaro Minerals Indonesia | PT Cilacap vs. Autopedia Sukses Lestari | PT Cilacap vs. Wir Asia 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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