Correlation Between PT Techno9 and Cita Mineral
Can any of the company-specific risk be diversified away by investing in both PT Techno9 and Cita 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 PT Techno9 and Cita Mineral into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Techno9 Indonesia and Cita Mineral Investindo, you can compare the effects of market volatilities on PT Techno9 and Cita 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 PT Techno9 with a short position of Cita Mineral. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Techno9 and Cita Mineral.
Diversification Opportunities for PT Techno9 and Cita Mineral
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NINE and Cita is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding PT Techno9 Indonesia and Cita Mineral Investindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cita Mineral Investindo and PT Techno9 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 PT Techno9 Indonesia are associated (or correlated) with Cita Mineral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cita Mineral Investindo has no effect on the direction of PT Techno9 i.e., PT Techno9 and Cita Mineral go up and down completely randomly.
Pair Corralation between PT Techno9 and Cita Mineral
Assuming the 90 days trading horizon PT Techno9 Indonesia is expected to generate 2.08 times more return on investment than Cita Mineral. However, PT Techno9 is 2.08 times more volatile than Cita Mineral Investindo. It trades about 0.07 of its potential returns per unit of risk. Cita Mineral Investindo is currently generating about 0.05 per unit of risk. If you would invest 1,800 in PT Techno9 Indonesia on August 29, 2024 and sell it today you would earn a total of 1,800 from holding PT Techno9 Indonesia or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Techno9 Indonesia vs. Cita Mineral Investindo
Performance |
| Timeline |
| PT Techno9 Indonesia |
| Cita Mineral Investindo |
PT Techno9 and Cita Mineral Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Techno9 and Cita Mineral
The main advantage of trading using opposite PT Techno9 and Cita Mineral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Techno9 position performs unexpectedly, Cita 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 Cita Mineral will offset losses from the drop in Cita Mineral's long position.| PT Techno9 vs. Ciptadana Asset Management | PT Techno9 vs. Humpuss Intermoda Transportasi | PT Techno9 vs. Metrodata Electronics Tbk | PT Techno9 vs. Indorama Synthetics Tbk |
| Cita Mineral vs. Barito Pacific Tbk | Cita Mineral vs. Charoen Pokphand Indonesia | Cita Mineral vs. Indocement Tunggal Prakarsa |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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