Correlation Between Liberty Global and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Liberty Global 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 Liberty Global and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Global PLC and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Liberty Global 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 Liberty Global with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Global and Telkom Indonesia.
Diversification Opportunities for Liberty Global and Telkom Indonesia
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liberty and Telkom is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Global PLC 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 Liberty Global 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 Liberty Global PLC 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 Liberty Global i.e., Liberty Global and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Liberty Global and Telkom Indonesia
Assuming the 90 days horizon Liberty Global PLC is expected to under-perform the Telkom Indonesia. In addition to that, Liberty Global is 4.63 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 -0.24 per unit of volatility. If you would invest 1,904 in Telkom Indonesia Tbk on August 23, 2024 and sell it today you would lose (209.00) from holding Telkom Indonesia Tbk or give up 10.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Global PLC vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| Liberty Global PLC |
| Telkom Indonesia Tbk |
Liberty Global and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Global and Telkom Indonesia
The main advantage of trading using opposite Liberty Global and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Global 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.| Liberty Global vs. Liberty Global PLC | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Broadband Srs |
| Telkom Indonesia vs. Small Cap Core | Telkom Indonesia vs. FitLife Brands, Common | Telkom Indonesia vs. Mutual Of America | Telkom Indonesia vs. Gfl Environmental Holdings |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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