Correlation Between Mustika Ratu and Central Omega
Can any of the company-specific risk be diversified away by investing in both Mustika Ratu 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 Mustika Ratu and Central Omega into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mustika Ratu Tbk and Central Omega Resources, you can compare the effects of market volatilities on Mustika Ratu 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 Mustika Ratu with a short position of Central Omega. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mustika Ratu and Central Omega.
Diversification Opportunities for Mustika Ratu and Central Omega
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mustika and Central is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mustika Ratu 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 Mustika Ratu 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 Mustika Ratu 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 Mustika Ratu i.e., Mustika Ratu and Central Omega go up and down completely randomly.
Pair Corralation between Mustika Ratu and Central Omega
Assuming the 90 days trading horizon Mustika Ratu Tbk is expected to under-perform the Central Omega. But the stock apears to be less risky and, when comparing its historical volatility, Mustika Ratu Tbk is 3.84 times less risky than Central Omega. The stock trades about -0.32 of its potential returns per unit of risk. The Central Omega Resources is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 16,000 in Central Omega Resources on August 25, 2024 and sell it today you would earn a total of 6,000 from holding Central Omega Resources or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Mustika Ratu Tbk vs. Central Omega Resources
Performance |
| Timeline |
| Mustika Ratu Tbk |
| Central Omega Resources |
Mustika Ratu and Central Omega Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mustika Ratu and Central Omega
The main advantage of trading using opposite Mustika Ratu and Central Omega positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mustika Ratu 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.| Mustika Ratu vs. Mandom Indonesia Tbk | Mustika Ratu vs. Langgeng Makmur Industri | Mustika Ratu vs. Merck Tbk | Mustika Ratu vs. Lautan Luas 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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