Correlation Between Colorpak Indonesia and Central Omega
Can any of the company-specific risk be diversified away by investing in both Colorpak Indonesia 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 Colorpak Indonesia and Central Omega into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colorpak Indonesia Tbk and Central Omega Resources, you can compare the effects of market volatilities on Colorpak Indonesia 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 Colorpak Indonesia with a short position of Central Omega. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colorpak Indonesia and Central Omega.
Diversification Opportunities for Colorpak Indonesia and Central Omega
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Colorpak and Central is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Colorpak Indonesia Tbk 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 Colorpak Indonesia 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 Colorpak Indonesia Tbk 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 Colorpak Indonesia i.e., Colorpak Indonesia and Central Omega go up and down completely randomly.
Pair Corralation between Colorpak Indonesia and Central Omega
Assuming the 90 days trading horizon Colorpak Indonesia Tbk is expected to under-perform the Central Omega. But the stock apears to be less risky and, when comparing its historical volatility, Colorpak Indonesia Tbk is 10.54 times less risky than Central Omega. The stock trades about -0.28 of its potential returns per unit of risk. The Central Omega Resources is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 21,400 in Central Omega Resources on September 4, 2024 and sell it today you would lose (400.00) from holding Central Omega Resources or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Colorpak Indonesia Tbk vs. Central Omega Resources
Performance |
| Timeline |
| Colorpak Indonesia Tbk |
| Central Omega Resources |
Colorpak Indonesia and Central Omega Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colorpak Indonesia and Central Omega
The main advantage of trading using opposite Colorpak Indonesia and Central Omega positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colorpak Indonesia 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.| Colorpak Indonesia vs. Ekadharma International Tbk | Colorpak Indonesia vs. Enseval Putra Megatrading | Colorpak Indonesia vs. Duta Pertiwi Nusantara | Colorpak Indonesia vs. Wilmar Cahaya Indonesia |
| Central Omega vs. Timah Persero Tbk | Central Omega vs. Semen Indonesia Persero | Central Omega vs. Mitra Pinasthika Mustika | Central Omega vs. Jakarta Int Hotels |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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