Correlation Between PT Indofood and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both PT Indofood 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 PT Indofood and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Indofood Sukses and Telkom Indonesia Tbk, you can compare the effects of market volatilities on PT Indofood 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 PT Indofood with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Telkom Indonesia.
Diversification Opportunities for PT Indofood and Telkom Indonesia
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between INDF and Telkom is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses 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 PT Indofood 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 PT Indofood Sukses 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 PT Indofood i.e., PT Indofood and Telkom Indonesia go up and down completely randomly.
Pair Corralation between PT Indofood and Telkom Indonesia
Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 0.87 times more return on investment than Telkom Indonesia. However, PT Indofood Sukses is 1.15 times less risky than Telkom Indonesia. It trades about 0.03 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.02 per unit of risk. If you would invest 625,959 in PT Indofood Sukses on August 24, 2024 and sell it today you would earn a total of 121,541 from holding PT Indofood Sukses or generate 19.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| PT Indofood Sukses |
| Telkom Indonesia Tbk |
PT Indofood and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Telkom Indonesia
The main advantage of trading using opposite PT Indofood and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood 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.| PT Indofood vs. Astra International Tbk | PT Indofood vs. Unilever Indonesia Tbk | PT Indofood vs. Telkom Indonesia Tbk | PT Indofood vs. Bank Mandiri Persero |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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