Correlation Between Align Technology and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Align Technology and Telkom Indonesia 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 Align Technology and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Align Technology and Telkom Indonesia 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 Align Technology with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Telkom Indonesia.
Diversification Opportunities for Align Technology and Telkom Indonesia
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Align and Telkom is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk and Align Technology 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 Align Technology are associated (or correlated) with Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of Align Technology i.e., Align Technology and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Align Technology and Telkom Indonesia
Assuming the 90 days horizon Align Technology is expected to generate 0.24 times more return on investment than Telkom Indonesia. However, Align Technology is 4.13 times less risky than Telkom Indonesia. It trades about 0.18 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.05 per unit of risk. If you would invest 20,180 in Align Technology on November 4, 2024 and sell it today you would earn a total of 1,340 from holding Align Technology or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| Align Technology |
| Telkom Indonesia Tbk |
Align Technology and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Telkom Indonesia
The main advantage of trading using opposite Align Technology and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Telkom Indonesia 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 Telkom Indonesia will offset losses from the drop in Telkom Indonesia's long position.| Align Technology vs. STMicroelectronics NV | Align Technology vs. Summit Materials | Align Technology vs. STORE ELECTRONIC | Align Technology vs. Materialise NV |
| Telkom Indonesia vs. CyberArk Software | Telkom Indonesia vs. FORMPIPE SOFTWARE AB | Telkom Indonesia vs. Gol Intelligent Airlines | Telkom Indonesia vs. United Airlines Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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