Correlation Between BCE and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both BCE 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 BCE and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and Telkom Indonesia Tbk, you can compare the effects of market volatilities on BCE 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 BCE with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and Telkom Indonesia.
Diversification Opportunities for BCE and Telkom Indonesia
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BCE and Telkom is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BCE 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 BCE 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 BCE 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 BCE i.e., BCE and Telkom Indonesia go up and down completely randomly.
Pair Corralation between BCE and Telkom Indonesia
Considering the 90-day investment horizon BCE Inc is expected to under-perform the Telkom Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 1.28 times less risky than Telkom Indonesia. The stock trades about -0.08 of its potential returns per unit of risk. The Telkom Indonesia Tbk is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 2,288 in Telkom Indonesia Tbk on January 10, 2025 and sell it today you would lose (876.00) from holding Telkom Indonesia Tbk or give up 38.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCE Inc vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| BCE Inc |
| Telkom Indonesia Tbk |
BCE and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and Telkom Indonesia
The main advantage of trading using opposite BCE and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE 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.| BCE vs. Rogers Communications | BCE vs. America Movil SAB | BCE vs. Telus Corp | BCE vs. Telefonica Brasil SA |
| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Lumen Technologies | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Charter Communications |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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