Correlation Between Cisarua Mountain and PAM Mineral

Can any of the company-specific risk be diversified away by investing in both Cisarua Mountain 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 Cisarua Mountain and PAM Mineral into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cisarua Mountain Dairy and PAM Mineral Tbk, you can compare the effects of market volatilities on Cisarua Mountain 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 Cisarua Mountain with a short position of PAM Mineral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisarua Mountain and PAM Mineral.

Diversification Opportunities for Cisarua Mountain and PAM Mineral

-0.07

Correlation Coefficient

Cisarua Mountain  PAM Mineral

Good diversification

The 3 months correlation between Cisarua and PAM is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cisarua Mountain Dairy 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 Cisarua Mountain 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 Cisarua Mountain Dairy 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 Cisarua Mountain i.e., Cisarua Mountain and PAM Mineral go up and down completely randomly.

Pair Corralation between Cisarua Mountain and PAM Mineral

Assuming the 90 days trading horizon Cisarua Mountain Dairy is expected to under-perform the PAM Mineral. But the stock apears to be less risky and, when comparing its historical volatility, Cisarua Mountain Dairy is 1.0 times less risky than PAM Mineral. The stock trades about -0.13 of its potential returns per unit of risk. The PAM Mineral Tbk is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  25,600  in PAM Mineral Tbk on December 21, 2024 and sell it today you would earn a total of  3,200  from holding PAM Mineral Tbk or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cisarua Mountain Dairy  vs.  PAM Mineral Tbk

Cisarua Mountain Dairy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cisarua Mountain Dairy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PAM Mineral Tbk

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PAM Mineral Tbk are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PAM Mineral disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cisarua Mountain and PAM Mineral

The main advantage of trading using opposite Cisarua Mountain and PAM Mineral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisarua Mountain 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.

The idea behind Cisarua Mountain Dairy and PAM Mineral Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.