Correlation Between Deutsche Telekom and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Deutsche Telekom 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 Deutsche Telekom and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Telekom AG and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Deutsche Telekom 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 Deutsche Telekom with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and Telkom Indonesia.
Diversification Opportunities for Deutsche Telekom and Telkom Indonesia
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Deutsche and Telkom is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG 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 Deutsche Telekom 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 Deutsche Telekom AG 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 Deutsche Telekom i.e., Deutsche Telekom and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Deutsche Telekom and Telkom Indonesia
Assuming the 90 days horizon Deutsche Telekom is expected to generate 1.28 times less return on investment than Telkom Indonesia. But when comparing it to its historical volatility, Deutsche Telekom AG is 5.62 times less risky than Telkom Indonesia. It trades about 0.34 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Telkom Indonesia Tbk on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Telkom Indonesia Tbk or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Telekom AG vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| Deutsche Telekom |
| Telkom Indonesia Tbk |
Deutsche Telekom and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Telekom and Telkom Indonesia
The main advantage of trading using opposite Deutsche Telekom and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Telekom 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.| Deutsche Telekom vs. T Mobile | Deutsche Telekom vs. ATT Inc | Deutsche Telekom vs. Deutsche Telekom AG | Deutsche Telekom vs. Superior Plus Corp |
| Telkom Indonesia vs. Westinghouse Air Brake | Telkom Indonesia vs. Altair Engineering | Telkom Indonesia vs. Ryanair Holdings plc | Telkom Indonesia vs. XLMedia PLC |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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