Correlation Between PAM Mineral and Indo Pureco

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

Diversification Opportunities for PAM Mineral and Indo Pureco

0.0

Correlation Coefficient

PAM Mineral  Indo Pureco

Pay attention - limited upside

The 3 months correlation between PAM and Indo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PAM Mineral Tbk and Indo Pureco Pratama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Pureco Pratama 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 Indo Pureco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Pureco Pratama has no effect on the direction of PAM Mineral i.e., PAM Mineral and Indo Pureco go up and down completely randomly.

Pair Corralation between PAM Mineral and Indo Pureco

If you would invest  24,200  in PAM Mineral Tbk on December 20, 2024 and sell it today you would earn a total of  4,000  from holding PAM Mineral Tbk or generate 16.53% return on investment over 90 days.

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

PAM Mineral Tbk  vs.  Indo Pureco Pratama

PAM Mineral Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PAM Mineral Tbk are ranked lower than 9 (%) 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.

Indo Pureco Pratama

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indo Pureco Pratama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Indo Pureco is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PAM Mineral and Indo Pureco

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

The idea behind PAM Mineral Tbk and Indo Pureco Pratama 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.