Correlation Between PT Sunter and PAM Mineral

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

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

Diversification Opportunities for PT Sunter and PAM Mineral

0.64

Correlation Coefficient

PT Sunter  PAM Mineral

Poor diversification

The 3 months correlation between SNLK and PAM is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding PT Sunter Lakeside 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 PT Sunter 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 PT Sunter Lakeside 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 PT Sunter i.e., PT Sunter and PAM Mineral go up and down completely randomly.

Pair Corralation between PT Sunter and PAM Mineral

Assuming the 90 days trading horizon PT Sunter Lakeside is expected to generate 2.26 times more return on investment than PAM Mineral. However, PT Sunter is 2.26 times more volatile than PAM Mineral Tbk. It trades about 0.04 of its potential returns per unit of risk. PAM Mineral Tbk is currently generating about -0.06 per unit of risk. If you would invest  74,000  in PT Sunter Lakeside on December 1, 2024 and sell it today you would earn a total of  1,500  from holding PT Sunter Lakeside or generate 2.03% return on investment over 90 days.

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

PT Sunter Lakeside  vs.  PAM Mineral Tbk

PT Sunter Lakeside

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Sunter Lakeside are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Sunter disclosed solid returns over the last few months and may actually be approaching a breakup point.

PAM Mineral Tbk

Risk-Adjusted Performance

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 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 PT Sunter and PAM Mineral

The main advantage of trading using opposite PT Sunter and PAM Mineral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Sunter 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 PT Sunter Lakeside 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.