Correlation Between Bumi Resources and Central Omega
Can any of the company-specific risk be diversified away by investing in both Bumi Resources and Central Omega 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 Bumi Resources and Central Omega into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bumi Resources Minerals and Central Omega Resources, you can compare the effects of market volatilities on Bumi Resources and Central Omega 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 Bumi Resources with a short position of Central Omega. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Resources and Central Omega.
Diversification Opportunities for Bumi Resources and Central Omega
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bumi and Central is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Resources Minerals and Central Omega Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Omega Resources and Bumi Resources 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 Bumi Resources Minerals are associated (or correlated) with Central Omega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Omega Resources has no effect on the direction of Bumi Resources i.e., Bumi Resources and Central Omega go up and down completely randomly.
Pair Corralation between Bumi Resources and Central Omega
Assuming the 90 days trading horizon Bumi Resources Minerals is expected to generate 1.06 times more return on investment than Central Omega. However, Bumi Resources is 1.06 times more volatile than Central Omega Resources. It trades about 0.07 of its potential returns per unit of risk. Central Omega Resources is currently generating about 0.05 per unit of risk. If you would invest 17,600 in Bumi Resources Minerals on August 28, 2024 and sell it today you would earn a total of 24,600 from holding Bumi Resources Minerals or generate 139.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bumi Resources Minerals vs. Central Omega Resources
Performance |
| Timeline |
| Bumi Resources Minerals |
| Central Omega Resources |
Bumi Resources and Central Omega Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumi Resources and Central Omega
The main advantage of trading using opposite Bumi Resources and Central Omega positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumi Resources position performs unexpectedly, Central Omega 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 Central Omega will offset losses from the drop in Central Omega's long position.| Bumi Resources vs. Energi Mega Persada | Bumi Resources vs. Harum Energy Tbk | Bumi Resources vs. Delta Dunia Makmur | Bumi Resources vs. Benakat Petroleum Energy |
| Central Omega vs. Cita Mineral Investindo | Central Omega vs. Intiland Development Tbk | Central Omega vs. J Resources Asia | Central Omega vs. Resource Alam Indonesia |
Check out your portfolio center.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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