Correlation Between PT Data and PAM Mineral

Can any of the company-specific risk be diversified away by investing in both PT Data 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 Data 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 Data Sinergitama and PAM Mineral Tbk, you can compare the effects of market volatilities on PT Data 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 Data with a short position of PAM Mineral. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Data and PAM Mineral.

Diversification Opportunities for PT Data and PAM Mineral

-0.22

Correlation Coefficient

PT Data  PAM Mineral

Very good diversification

The 3 months correlation between ELIT and PAM is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding PT Data Sinergitama 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 Data 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 Data Sinergitama 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 Data i.e., PT Data and PAM Mineral go up and down completely randomly.

Pair Corralation between PT Data and PAM Mineral

Assuming the 90 days trading horizon PT Data Sinergitama is expected to generate 1.25 times more return on investment than PAM Mineral. However, PT Data is 1.25 times more volatile than PAM Mineral Tbk. It trades about 0.06 of its potential returns per unit of risk. PAM Mineral Tbk is currently generating about 0.05 per unit of risk. If you would invest  10,900  in PT Data Sinergitama on September 8, 2024 and sell it today you would earn a total of  900.00  from holding PT Data Sinergitama or generate 8.26% return on investment over 90 days.

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

PT Data Sinergitama  vs.  PAM Mineral Tbk

PT Data Sinergitama

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Data Sinergitama are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Data may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PAM Mineral Tbk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PAM Mineral Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PAM Mineral may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT Data and PAM Mineral

The main advantage of trading using opposite PT Data and PAM Mineral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Data 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 Data Sinergitama 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..