Correlation Between Pertamina Geothermal and Citatah Tbk

Can any of the company-specific risk be diversified away by investing in both Pertamina Geothermal and Citatah Tbk 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 Pertamina Geothermal and Citatah Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pertamina Geothermal Energy and Citatah Tbk, you can compare the effects of market volatilities on Pertamina Geothermal and Citatah Tbk 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 Pertamina Geothermal with a short position of Citatah Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pertamina Geothermal and Citatah Tbk.

Diversification Opportunities for Pertamina Geothermal and Citatah Tbk

0.34

Correlation Coefficient

Pertamina Geothermal  Citatah Tbk

Weak diversification

The 3 months correlation between Pertamina and Citatah is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pertamina Geothermal Energy and Citatah Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citatah Tbk and Pertamina Geothermal 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 Pertamina Geothermal Energy are associated (or correlated) with Citatah Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citatah Tbk has no effect on the direction of Pertamina Geothermal i.e., Pertamina Geothermal and Citatah Tbk go up and down completely randomly.

Pair Corralation between Pertamina Geothermal and Citatah Tbk

Assuming the 90 days trading horizon Pertamina Geothermal Energy is expected to under-perform the Citatah Tbk. But the stock apears to be less risky and, when comparing its historical volatility, Pertamina Geothermal Energy is 1.21 times less risky than Citatah Tbk. The stock trades about -0.13 of its potential returns per unit of risk. The Citatah Tbk is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,500  in Citatah Tbk on October 9, 2024 and sell it today you would earn a total of  200.00  from holding Citatah Tbk or generate 8.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Pertamina Geothermal Energy  vs.  Citatah Tbk

Pertamina Geothermal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pertamina Geothermal Energy 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.

Citatah Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citatah Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Pertamina Geothermal and Citatah Tbk

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

The idea behind Pertamina Geothermal Energy and Citatah 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.