Correlation Between Apple and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Telkom Indonesia.
Diversification Opportunities for Apple and Telkom Indonesia
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and Telkom is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Apple and Telkom Indonesia
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.19 times more return on investment than Telkom Indonesia. However, Apple Inc is 5.15 times less risky than Telkom Indonesia. It trades about 0.05 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.09 per unit of risk. If you would invest 21,629 in Apple Inc on August 24, 2024 and sell it today you would earn a total of 266.00 from holding Apple Inc or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| Apple Inc |
| Telkom Indonesia Tbk |
Apple and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Telkom Indonesia
The main advantage of trading using opposite Apple and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.The idea behind Apple Inc and Telkom Indonesia Tbk 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.| Telkom Indonesia vs. Apple Inc | Telkom Indonesia vs. Apple Inc | Telkom Indonesia vs. Apple Inc | Telkom Indonesia vs. Apple Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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