Correlation Between Central Omega and Alfa Energi

Can any of the company-specific risk be diversified away by investing in both Central Omega and Alfa Energi 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 Alfa Energi 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 Alfa Energi Investama, you can compare the effects of market volatilities on Central Omega and Alfa Energi 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 Alfa Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Omega and Alfa Energi.

Diversification Opportunities for Central Omega and Alfa Energi

-0.88

Correlation Coefficient

Central Omega  Alfa Energi

Pay attention - limited upside

The 3 months correlation between Central and Alfa is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Central Omega Resources and Alfa Energi Investama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Energi Investama 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 Alfa Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Energi Investama has no effect on the direction of Central Omega i.e., Central Omega and Alfa Energi go up and down completely randomly.

Pair Corralation between Central Omega and Alfa Energi

Assuming the 90 days trading horizon Central Omega Resources is expected to generate 2.47 times more return on investment than Alfa Energi. However, Central Omega is 2.47 times more volatile than Alfa Energi Investama. It trades about 0.2 of its potential returns per unit of risk. Alfa Energi Investama is currently generating about -0.1 per unit of risk. If you would invest  12,100  in Central Omega Resources on September 13, 2024 and sell it today you would earn a total of  11,100  from holding Central Omega Resources or generate 91.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Central Omega Resources  vs.  Alfa Energi Investama

Central Omega Resources

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Central Omega Resources are ranked lower than 15 (%) 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.

Alfa Energi Investama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Energi Investama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Central Omega and Alfa Energi

The main advantage of trading using opposite Central Omega and Alfa Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Omega position performs unexpectedly, Alfa Energi 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 Alfa Energi will offset losses from the drop in Alfa Energi's long position.

The idea behind Central Omega Resources and Alfa Energi Investama 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.