Correlation Between Langgeng Makmur and Central Omega
Can any of the company-specific risk be diversified away by investing in both Langgeng Makmur 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 Langgeng Makmur and Central Omega into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Langgeng Makmur Industri and Central Omega Resources, you can compare the effects of market volatilities on Langgeng Makmur 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 Langgeng Makmur with a short position of Central Omega. Check out your portfolio center. Please also check ongoing floating volatility patterns of Langgeng Makmur and Central Omega.
Diversification Opportunities for Langgeng Makmur and Central Omega
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Langgeng and Central is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Langgeng Makmur Industri 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 Langgeng Makmur 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 Langgeng Makmur Industri 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 Langgeng Makmur i.e., Langgeng Makmur and Central Omega go up and down completely randomly.
Pair Corralation between Langgeng Makmur and Central Omega
Assuming the 90 days trading horizon Langgeng Makmur Industri is expected to generate 1.98 times more return on investment than Central Omega. However, Langgeng Makmur is 1.98 times more volatile than Central Omega Resources. It trades about 0.17 of its potential returns per unit of risk. Central Omega Resources is currently generating about 0.2 per unit of risk. If you would invest 11,500 in Langgeng Makmur Industri on August 25, 2024 and sell it today you would earn a total of 6,700 from holding Langgeng Makmur Industri or generate 58.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Langgeng Makmur Industri vs. Central Omega Resources
Performance |
| Timeline |
| Langgeng Makmur Industri |
| Central Omega Resources |
Langgeng Makmur and Central Omega Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Langgeng Makmur and Central Omega
The main advantage of trading using opposite Langgeng Makmur and Central Omega positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Langgeng Makmur 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.| Langgeng Makmur vs. Kedaung Indah Can | Langgeng Makmur vs. Kedawung Setia Industrial | Langgeng Makmur vs. Mustika Ratu Tbk | Langgeng Makmur vs. Pyridam Farma Tbk |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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