Correlation Between PAM Mineral and PT Citra

Can any of the company-specific risk be diversified away by investing in both PAM Mineral and PT Citra 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 PT Citra 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 PT Citra Tubindo, you can compare the effects of market volatilities on PAM Mineral and PT Citra 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 PT Citra. Check out your portfolio center. Please also check ongoing floating volatility patterns of PAM Mineral and PT Citra.

Diversification Opportunities for PAM Mineral and PT Citra

0.11

Correlation Coefficient

PAM Mineral  PT Citra

Average diversification

The 3 months correlation between PAM and CTBN is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding PAM Mineral Tbk and PT Citra Tubindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Citra Tubindo 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 PT Citra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Citra Tubindo has no effect on the direction of PAM Mineral i.e., PAM Mineral and PT Citra go up and down completely randomly.

Pair Corralation between PAM Mineral and PT Citra

Assuming the 90 days trading horizon PAM Mineral is expected to generate 1.05 times less return on investment than PT Citra. In addition to that, PAM Mineral is 1.04 times more volatile than PT Citra Tubindo. It trades about 0.04 of its total potential returns per unit of risk. PT Citra Tubindo is currently generating about 0.04 per unit of volatility. If you would invest  188,500  in PT Citra Tubindo on October 12, 2024 and sell it today you would earn a total of  90,500  from holding PT Citra Tubindo or generate 48.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

PAM Mineral Tbk  vs.  PT Citra Tubindo

PAM Mineral Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PAM Mineral Tbk 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PT Citra Tubindo

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Citra Tubindo are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Citra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PAM Mineral and PT Citra

The main advantage of trading using opposite PAM Mineral and PT Citra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PAM Mineral position performs unexpectedly, PT Citra 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 PT Citra will offset losses from the drop in PT Citra's long position.

The idea behind PAM Mineral Tbk and PT Citra Tubindo 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.

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 CEOs Directory module to screen CEOs from public companies around the world.