Correlation Between Archi Indonesia and PAM Mineral
Can any of the company-specific risk be diversified away by investing in both Archi Indonesia 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 Archi Indonesia and PAM Mineral into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archi Indonesia Tbk and PAM Mineral Tbk, you can compare the effects of market volatilities on Archi Indonesia 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 Archi Indonesia with a short position of PAM Mineral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archi Indonesia and PAM Mineral.
Diversification Opportunities for Archi Indonesia and PAM Mineral
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Archi and PAM is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Archi Indonesia Tbk 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 Archi Indonesia 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 Archi Indonesia Tbk 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 Archi Indonesia i.e., Archi Indonesia and PAM Mineral go up and down completely randomly.
Pair Corralation between Archi Indonesia and PAM Mineral
Assuming the 90 days trading horizon Archi Indonesia is expected to generate 2.97 times less return on investment than PAM Mineral. In addition to that, Archi Indonesia is 1.01 times more volatile than PAM Mineral Tbk. It trades about 0.03 of its total potential returns per unit of risk. PAM Mineral Tbk is currently generating about 0.1 per unit of volatility. If you would invest 26,000 in PAM Mineral Tbk on December 29, 2024 and sell it today you would earn a total of 3,800 from holding PAM Mineral Tbk or generate 14.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Archi Indonesia Tbk vs. PAM Mineral Tbk
Performance |
Timeline |
Archi Indonesia Tbk |
PAM Mineral Tbk |
Archi Indonesia and PAM Mineral Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Archi Indonesia and PAM Mineral
The main advantage of trading using opposite Archi Indonesia and PAM Mineral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archi Indonesia 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.Archi Indonesia vs. Triputra Agro Persada | Archi Indonesia vs. Berkah Beton Sadaya | Archi Indonesia vs. PAM Mineral Tbk | Archi Indonesia vs. PT Bukalapak |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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