Correlation Between Timah Persero and Central Omega
Can any of the company-specific risk be diversified away by investing in both Timah Persero 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 Timah Persero and Central Omega into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timah Persero Tbk and Central Omega Resources, you can compare the effects of market volatilities on Timah Persero 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 Timah Persero with a short position of Central Omega. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timah Persero and Central Omega.
Diversification Opportunities for Timah Persero and Central Omega
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Timah and Central is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Timah Persero 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 Timah Persero 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 Timah Persero 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 Timah Persero i.e., Timah Persero and Central Omega go up and down completely randomly.
Pair Corralation between Timah Persero and Central Omega
Assuming the 90 days trading horizon Timah Persero Tbk is expected to under-perform the Central Omega. In addition to that, Timah Persero is 1.26 times more volatile than Central Omega Resources. It trades about -0.16 of its total potential returns per unit of risk. Central Omega Resources is currently generating about -0.18 per unit of volatility. If you would invest 24,400 in Central Omega Resources on September 12, 2024 and sell it today you would lose (3,000) from holding Central Omega Resources or give up 12.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timah Persero Tbk vs. Central Omega Resources
Performance |
| Timeline |
| Timah Persero Tbk |
| Central Omega Resources |
Timah Persero and Central Omega Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timah Persero and Central Omega
The main advantage of trading using opposite Timah Persero and Central Omega positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timah Persero 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.| Timah Persero vs. Vale Indonesia Tbk | Timah Persero vs. Aneka Tambang Persero | Timah Persero vs. Bukit Asam Tbk | Timah Persero vs. Perusahaan Gas Negara |
| Central Omega vs. Cita Mineral Investindo | Central Omega vs. Intiland Development Tbk | Central Omega vs. J Resources Asia | Central Omega vs. Resource Alam Indonesia |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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