Correlation Between Energi Mega and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Energi Mega 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 Energi Mega and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energi Mega Persada and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Energi Mega 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 Energi Mega with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energi Mega and Telkom Indonesia.
Diversification Opportunities for Energi Mega and Telkom Indonesia
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Energi and Telkom is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Energi Mega Persada 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 Energi Mega 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 Energi Mega Persada 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 Energi Mega i.e., Energi Mega and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Energi Mega and Telkom Indonesia
Assuming the 90 days trading horizon Energi Mega Persada is expected to under-perform the Telkom Indonesia. In addition to that, Energi Mega is 1.72 times more volatile than Telkom Indonesia Tbk. It trades about -0.17 of its total potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.12 per unit of volatility. If you would invest 290,000 in Telkom Indonesia Tbk on August 31, 2024 and sell it today you would lose (18,000) from holding Telkom Indonesia Tbk or give up 6.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energi Mega Persada vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| Energi Mega Persada |
| Telkom Indonesia Tbk |
Energi Mega and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energi Mega and Telkom Indonesia
The main advantage of trading using opposite Energi Mega and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energi Mega 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.| Energi Mega vs. Mitrabahtera Segara Sejati | Energi Mega vs. Weha Transportasi Indonesia | Energi Mega vs. Rig Tenders Tbk | Energi Mega vs. Rukun Raharja Tbk |
| Telkom Indonesia vs. Indosat Tbk | Telkom Indonesia vs. XL Axiata Tbk | Telkom Indonesia vs. Energi Mega Persada | Telkom Indonesia vs. Bakrie Brothers Tbk |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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