Correlation Between Kalbe Farma and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Kalbe Farma 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 Kalbe Farma and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kalbe Farma Tbk and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Kalbe Farma 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 Kalbe Farma with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kalbe Farma and Telkom Indonesia.
Diversification Opportunities for Kalbe Farma and Telkom Indonesia
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kalbe and Telkom is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kalbe Farma 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 Kalbe Farma 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 Kalbe Farma 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 Kalbe Farma i.e., Kalbe Farma and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Kalbe Farma and Telkom Indonesia
Assuming the 90 days trading horizon Kalbe Farma Tbk is expected to under-perform the Telkom Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, Kalbe Farma Tbk is 1.58 times less risky than Telkom Indonesia. The stock trades about -0.29 of its potential returns per unit of risk. The Telkom Indonesia Tbk is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 292,000 in Telkom Indonesia Tbk on August 27, 2024 and sell it today you would lose (17,000) from holding Telkom Indonesia Tbk or give up 5.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kalbe Farma Tbk vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| Kalbe Farma Tbk |
| Telkom Indonesia Tbk |
Kalbe Farma and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kalbe Farma and Telkom Indonesia
The main advantage of trading using opposite Kalbe Farma and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kalbe Farma 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.| Kalbe Farma vs. PT Indofood Sukses | Kalbe Farma vs. Unilever Indonesia Tbk | Kalbe Farma vs. Semen Indonesia Persero | Kalbe Farma vs. United Tractors Tbk |
| Telkom Indonesia vs. Mnc Land Tbk | Telkom Indonesia vs. MNC Vision Networks | Telkom Indonesia vs. Medikaloka Hermina PT |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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