Correlation Between STEEL DYNAMICS and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both STEEL DYNAMICS 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 STEEL DYNAMICS and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STEEL DYNAMICS and Telkom Indonesia Tbk, you can compare the effects of market volatilities on STEEL DYNAMICS 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 STEEL DYNAMICS with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEEL DYNAMICS and Telkom Indonesia.
Diversification Opportunities for STEEL DYNAMICS and Telkom Indonesia
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between STEEL and Telkom is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding STEEL DYNAMICS 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 STEEL DYNAMICS 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 STEEL DYNAMICS 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 STEEL DYNAMICS i.e., STEEL DYNAMICS and Telkom Indonesia go up and down completely randomly.
Pair Corralation between STEEL DYNAMICS and Telkom Indonesia
Assuming the 90 days trading horizon STEEL DYNAMICS is expected to generate 19.42 times less return on investment than Telkom Indonesia. But when comparing it to its historical volatility, STEEL DYNAMICS is 3.55 times less risky than Telkom Indonesia. It trades about 0.01 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Telkom Indonesia Tbk on October 27, 2024 and sell it today you would lose (1.00) from holding Telkom Indonesia Tbk or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STEEL DYNAMICS vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| STEEL DYNAMICS |
| Telkom Indonesia Tbk |
STEEL DYNAMICS and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STEEL DYNAMICS and Telkom Indonesia
The main advantage of trading using opposite STEEL DYNAMICS and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STEEL DYNAMICS 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.| STEEL DYNAMICS vs. Amkor Technology | STEEL DYNAMICS vs. THORNEY TECHS LTD | STEEL DYNAMICS vs. GLG LIFE TECH | STEEL DYNAMICS vs. Playtech plc |
| Telkom Indonesia vs. Marie Brizard Wine | Telkom Indonesia vs. ITALIAN WINE BRANDS | Telkom Indonesia vs. Align Technology | Telkom Indonesia vs. Siamgas And Petrochemicals |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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