Correlation Between Bakrie Brothers and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Bakrie Brothers 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 Bakrie Brothers and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bakrie Brothers Tbk and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Bakrie Brothers 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 Bakrie Brothers with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bakrie Brothers and Telkom Indonesia.
Diversification Opportunities for Bakrie Brothers and Telkom Indonesia
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bakrie and Telkom is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bakrie Brothers Tbk 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 Bakrie Brothers 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 Bakrie Brothers Tbk 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 Bakrie Brothers i.e., Bakrie Brothers and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Bakrie Brothers and Telkom Indonesia
Assuming the 90 days trading horizon Bakrie Brothers Tbk is expected to generate 2.06 times more return on investment than Telkom Indonesia. However, Bakrie Brothers is 2.06 times more volatile than Telkom Indonesia Tbk. It trades about 0.04 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.04 per unit of risk. If you would invest 4,600 in Bakrie Brothers Tbk on September 2, 2024 and sell it today you would earn a total of 100.00 from holding Bakrie Brothers Tbk or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bakrie Brothers Tbk vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| Bakrie Brothers Tbk |
| Telkom Indonesia Tbk |
Bakrie Brothers and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bakrie Brothers and Telkom Indonesia
The main advantage of trading using opposite Bakrie Brothers and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bakrie Brothers 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.| Bakrie Brothers vs. Bakrieland Development Tbk | Bakrie Brothers vs. Bakrie Sumatera Plantations | Bakrie Brothers vs. Energi Mega Persada | Bakrie Brothers vs. Darma Henwa Tbk |
| Telkom Indonesia vs. Astra International Tbk | Telkom Indonesia vs. Bank Rakyat Indonesia | Telkom Indonesia vs. Bank Mandiri Persero | Telkom Indonesia vs. Bank Central Asia |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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