Correlation Between Central Omega and Timah Persero
Can any of the company-specific risk be diversified away by investing in both Central Omega and Timah Persero 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 Timah Persero 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 Timah Persero Tbk, you can compare the effects of market volatilities on Central Omega and Timah Persero 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 Timah Persero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Omega and Timah Persero.
Diversification Opportunities for Central Omega and Timah Persero
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and Timah is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Central Omega Resources and Timah Persero Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timah Persero Tbk 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 Timah Persero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timah Persero Tbk has no effect on the direction of Central Omega i.e., Central Omega and Timah Persero go up and down completely randomly.
Pair Corralation between Central Omega and Timah Persero
Assuming the 90 days trading horizon Central Omega Resources is expected to generate 0.95 times more return on investment than Timah Persero. However, Central Omega Resources is 1.06 times less risky than Timah Persero. It trades about 0.09 of its potential returns per unit of risk. Timah Persero Tbk is currently generating about 0.08 per unit of risk. If you would invest 11,300 in Central Omega Resources on September 4, 2024 and sell it today you would earn a total of 9,700 from holding Central Omega Resources or generate 85.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Omega Resources vs. Timah Persero Tbk
Performance |
| Timeline |
| Central Omega Resources |
| Timah Persero Tbk |
Central Omega and Timah Persero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Omega and Timah Persero
The main advantage of trading using opposite Central Omega and Timah Persero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Omega position performs unexpectedly, Timah Persero 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 Timah Persero will offset losses from the drop in Timah Persero's long position.| Central Omega vs. Timah Persero Tbk | Central Omega vs. Semen Indonesia Persero | Central Omega vs. Mitra Pinasthika Mustika | Central Omega vs. Jakarta Int Hotels |
| Timah Persero vs. Vale Indonesia Tbk | Timah Persero vs. Aneka Tambang Persero | Timah Persero vs. Bukit Asam Tbk | Timah Persero vs. Perusahaan Gas Negara |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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