Correlation Between PAM Mineral and Timah Persero
Can any of the company-specific risk be diversified away by investing in both PAM Mineral and Timah Persero 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 Timah Persero 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 Timah Persero Tbk, you can compare the effects of market volatilities on PAM Mineral and Timah Persero 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 Timah Persero. Check out your portfolio center. Please also check ongoing floating volatility patterns of PAM Mineral and Timah Persero.
Diversification Opportunities for PAM Mineral and Timah Persero
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between PAM and Timah is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding PAM Mineral Tbk and Timah Persero Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timah Persero Tbk 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 Timah Persero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timah Persero Tbk has no effect on the direction of PAM Mineral i.e., PAM Mineral and Timah Persero go up and down completely randomly.
Pair Corralation between PAM Mineral and Timah Persero
Assuming the 90 days trading horizon PAM Mineral Tbk is expected to generate 1.78 times more return on investment than Timah Persero. However, PAM Mineral is 1.78 times more volatile than Timah Persero Tbk. It trades about 0.06 of its potential returns per unit of risk. Timah Persero Tbk is currently generating about 0.02 per unit of risk. If you would invest 11,526 in PAM Mineral Tbk on August 26, 2024 and sell it today you would earn a total of 17,474 from holding PAM Mineral Tbk or generate 151.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
PAM Mineral Tbk vs. Timah Persero Tbk
Performance |
| Timeline |
| PAM Mineral Tbk |
| Timah Persero Tbk |
PAM Mineral and Timah Persero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PAM Mineral and Timah Persero
The main advantage of trading using opposite PAM Mineral and Timah Persero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PAM Mineral position performs unexpectedly, Timah Persero 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 Timah Persero will offset losses from the drop in Timah Persero'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 |
| Timah Persero vs. Kedaung Indah Can | Timah Persero vs. Langgeng Makmur Industri | Timah Persero vs. Kabelindo Murni Tbk | Timah Persero vs. Mustika Ratu 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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