Correlation Between Jaya Swarasa and PAM Mineral

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

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

Diversification Opportunities for Jaya Swarasa and PAM Mineral

0.33

Correlation Coefficient

Jaya Swarasa  PAM Mineral

Weak diversification

The 3 months correlation between Jaya and PAM is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Jaya Swarasa Agung 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 Jaya Swarasa 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 Jaya Swarasa Agung 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 Jaya Swarasa i.e., Jaya Swarasa and PAM Mineral go up and down completely randomly.

Pair Corralation between Jaya Swarasa and PAM Mineral

Assuming the 90 days trading horizon Jaya Swarasa is expected to generate 63.06 times less return on investment than PAM Mineral. But when comparing it to its historical volatility, Jaya Swarasa Agung is 2.66 times less risky than PAM Mineral. It trades about 0.0 of its potential returns per unit of risk. PAM Mineral Tbk is currently generating about 0.11 of returns per unit of risk over similar time horizon. 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	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Jaya Swarasa Agung  vs.  PAM Mineral Tbk

Jaya Swarasa Agung

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Jaya Swarasa and PAM Mineral

The main advantage of trading using opposite Jaya Swarasa and PAM Mineral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jaya Swarasa 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 Jaya Swarasa Agung 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.