Correlation Between PAM Mineral and Trans Power
Can any of the company-specific risk be diversified away by investing in both PAM Mineral and Trans Power 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 Trans Power 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 Trans Power Marine, you can compare the effects of market volatilities on PAM Mineral and Trans Power 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 Trans Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of PAM Mineral and Trans Power.
Diversification Opportunities for PAM Mineral and Trans Power
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between PAM and Trans is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding PAM Mineral Tbk and Trans Power Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trans Power Marine 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 Trans Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trans Power Marine has no effect on the direction of PAM Mineral i.e., PAM Mineral and Trans Power go up and down completely randomly.
Pair Corralation between PAM Mineral and Trans Power
Assuming the 90 days trading horizon PAM Mineral Tbk is expected to generate 2.02 times more return on investment than Trans Power. However, PAM Mineral is 2.02 times more volatile than Trans Power Marine. It trades about 0.06 of its potential returns per unit of risk. Trans Power Marine is currently generating about 0.05 per unit of risk. If you would invest 11,526 in PAM Mineral Tbk on August 24, 2024 and sell it today you would earn a total of 17,274 from holding PAM Mineral Tbk or generate 149.87% 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. Trans Power Marine
Performance |
| Timeline |
| PAM Mineral Tbk |
| Trans Power Marine |
PAM Mineral and Trans Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PAM Mineral and Trans Power
The main advantage of trading using opposite PAM Mineral and Trans Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PAM Mineral position performs unexpectedly, Trans Power 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 Trans Power will offset losses from the drop in Trans Power'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 |
| Trans Power vs. Samudera Indonesia Tbk | Trans Power vs. Steady Safe TBK | Trans Power vs. Rukun Raharja Tbk | Trans Power vs. PT Temas 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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