Correlation Between Central Omega and Buana Listya
Can any of the company-specific risk be diversified away by investing in both Central Omega and Buana Listya 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 Central Omega and Buana Listya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Omega Resources and Buana Listya Tama, you can compare the effects of market volatilities on Central Omega and Buana Listya 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 Central Omega with a short position of Buana Listya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Omega and Buana Listya.
Diversification Opportunities for Central Omega and Buana Listya
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Central and Buana is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Central Omega Resources and Buana Listya Tama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buana Listya Tama and Central Omega 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 Central Omega Resources are associated (or correlated) with Buana Listya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buana Listya Tama has no effect on the direction of Central Omega i.e., Central Omega and Buana Listya go up and down completely randomly.
Pair Corralation between Central Omega and Buana Listya
Assuming the 90 days trading horizon Central Omega Resources is expected to generate 1.74 times more return on investment than Buana Listya. However, Central Omega is 1.74 times more volatile than Buana Listya Tama. It trades about 0.2 of its potential returns per unit of risk. Buana Listya Tama is currently generating about -0.18 per unit of risk. If you would invest 15,700 in Central Omega Resources on August 27, 2024 and sell it today you would earn a total of 5,700 from holding Central Omega Resources or generate 36.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Omega Resources vs. Buana Listya Tama
Performance |
| Timeline |
| Central Omega Resources |
| Buana Listya Tama |
Central Omega and Buana Listya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Omega and Buana Listya
The main advantage of trading using opposite Central Omega and Buana Listya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Omega position performs unexpectedly, Buana Listya 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 Buana Listya will offset losses from the drop in Buana Listya's long position.| Central Omega vs. Kedaung Indah Can | Central Omega vs. Langgeng Makmur Industri | Central Omega vs. Kabelindo Murni Tbk | Central Omega vs. Mustika Ratu Tbk |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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