Correlation Between Pertamina Geothermal and Ciptadana Asset

Can any of the company-specific risk be diversified away by investing in both Pertamina Geothermal and Ciptadana Asset 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 Ciptadana Asset 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 Ciptadana Asset Management, you can compare the effects of market volatilities on Pertamina Geothermal and Ciptadana Asset 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 Ciptadana Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pertamina Geothermal and Ciptadana Asset.

Diversification Opportunities for Pertamina Geothermal and Ciptadana Asset

-0.2

Correlation Coefficient

Pertamina Geothermal  Ciptadana Asset

Good diversification

The 3 months correlation between Pertamina and Ciptadana is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pertamina Geothermal Energy and Ciptadana Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciptadana Asset Mana 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 Ciptadana Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciptadana Asset Mana has no effect on the direction of Pertamina Geothermal i.e., Pertamina Geothermal and Ciptadana Asset go up and down completely randomly.

Pair Corralation between Pertamina Geothermal and Ciptadana Asset

Assuming the 90 days trading horizon Pertamina Geothermal Energy is expected to under-perform the Ciptadana Asset. In addition to that, Pertamina Geothermal is 1.06 times more volatile than Ciptadana Asset Management. It trades about -0.11 of its total potential returns per unit of risk. Ciptadana Asset Management is currently generating about 0.04 per unit of volatility. If you would invest  5,739  in Ciptadana Asset Management on December 24, 2024 and sell it today you would earn a total of  261.00  from holding Ciptadana Asset Management or generate 4.55% return on investment over 90 days.

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

Pertamina Geothermal Energy  vs.  Ciptadana Asset Management

Pertamina Geothermal

Risk-Adjusted Performance

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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ciptadana Asset Mana

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ciptadana Asset Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Ciptadana Asset may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pertamina Geothermal and Ciptadana Asset

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

The idea behind Pertamina Geothermal Energy and Ciptadana Asset Management 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..