Correlation Between Peak Resources and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Peak Resources 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 Peak Resources and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peak Resources Limited and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Peak Resources 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 Peak Resources with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peak Resources and Telkom Indonesia.
Diversification Opportunities for Peak Resources and Telkom Indonesia
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Peak and Telkom is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited 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 Peak Resources 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 Peak Resources Limited 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 Peak Resources i.e., Peak Resources and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Peak Resources and Telkom Indonesia
Assuming the 90 days horizon Peak Resources Limited is expected to under-perform the Telkom Indonesia. In addition to that, Peak Resources is 2.08 times more volatile than Telkom Indonesia Tbk. It trades about -0.09 of its total potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.01 per unit of volatility. If you would invest 16.00 in Telkom Indonesia Tbk on September 4, 2024 and sell it today you would lose (1.00) from holding Telkom Indonesia Tbk or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Peak Resources Limited vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| Peak Resources |
| Telkom Indonesia Tbk |
Peak Resources and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peak Resources and Telkom Indonesia
The main advantage of trading using opposite Peak Resources and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peak Resources 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.| Peak Resources vs. BHP Group Limited | Peak Resources vs. Rio Tinto Group | Peak Resources vs. Vale SA | Peak Resources vs. Glencore plc |
| Telkom Indonesia vs. TOTAL GABON | Telkom Indonesia vs. Walgreens Boots Alliance | Telkom Indonesia vs. Peak Resources Limited |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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