Correlation Between Central Omega and Resource Alam
Can any of the company-specific risk be diversified away by investing in both Central Omega and Resource Alam 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 Resource Alam 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 Resource Alam Indonesia, you can compare the effects of market volatilities on Central Omega and Resource Alam 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 Resource Alam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Omega and Resource Alam.
Diversification Opportunities for Central Omega and Resource Alam
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Central and Resource is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Central Omega Resources and Resource Alam Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Alam Indonesia 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 Resource Alam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Alam Indonesia has no effect on the direction of Central Omega i.e., Central Omega and Resource Alam go up and down completely randomly.
Pair Corralation between Central Omega and Resource Alam
Assuming the 90 days trading horizon Central Omega Resources is expected to generate 2.94 times more return on investment than Resource Alam. However, Central Omega is 2.94 times more volatile than Resource Alam Indonesia. It trades about 0.18 of its potential returns per unit of risk. Resource Alam Indonesia is currently generating about -0.04 per unit of risk. If you would invest 12,300 in Central Omega Resources on September 12, 2024 and sell it today you would earn a total of 9,100 from holding Central Omega Resources or generate 73.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Omega Resources vs. Resource Alam Indonesia
Performance |
| Timeline |
| Central Omega Resources |
| Resource Alam Indonesia |
Central Omega and Resource Alam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Omega and Resource Alam
The main advantage of trading using opposite Central Omega and Resource Alam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Omega position performs unexpectedly, Resource Alam 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 Resource Alam will offset losses from the drop in Resource Alam's long position.| Central Omega vs. Cita Mineral Investindo | Central Omega vs. Intiland Development Tbk | Central Omega vs. J Resources Asia | Central Omega vs. Resource Alam Indonesia |
| Resource Alam vs. Harum Energy Tbk | Resource Alam vs. Delta Dunia Makmur | Resource Alam vs. Adi Sarana Armada | Resource Alam vs. Elang Mahkota Teknologi |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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