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

0.54

Correlation Coefficient

Timah Persero  Central Omega

Very weak diversification

The 3 months correlation between Timah and Central is 0.54. 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 is expected to generate 5.88 times less return on investment than Central Omega. But when comparing it to its historical volatility, Timah Persero Tbk is 1.68 times less risky than Central Omega. It trades about 0.05 of its potential returns per unit of risk. Central Omega Resources is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  11,800  in Central Omega Resources on September 5, 2024 and sell it today you would earn a total of  9,000  from holding Central Omega Resources or generate 76.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Timah Persero Tbk  vs.  Central Omega Resources

Timah Persero Tbk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Timah Persero Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Timah Persero may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Central Omega Resources

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Central Omega Resources are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Central Omega disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind Timah Persero Tbk and Central Omega Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.