Correlation Between SINGAPORE AIRLINES and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES 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 SINGAPORE AIRLINES and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE AIRLINES and Telkom Indonesia Tbk, you can compare the effects of market volatilities on SINGAPORE AIRLINES 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 SINGAPORE AIRLINES with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and Telkom Indonesia.
Diversification Opportunities for SINGAPORE AIRLINES and Telkom Indonesia
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SINGAPORE and Telkom is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES 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 SINGAPORE AIRLINES 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 SINGAPORE AIRLINES 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 SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and Telkom Indonesia go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and Telkom Indonesia
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 2.36 times less return on investment than Telkom Indonesia. But when comparing it to its historical volatility, SINGAPORE AIRLINES is 7.54 times less risky than Telkom Indonesia. It trades about 0.25 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Telkom Indonesia Tbk on September 15, 2024 and sell it today you would earn a total of 1.00 from holding Telkom Indonesia Tbk or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SINGAPORE AIRLINES vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| Telkom Indonesia Tbk |
SINGAPORE AIRLINES and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and Telkom Indonesia
The main advantage of trading using opposite SINGAPORE AIRLINES and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES 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.| SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc |
| Telkom Indonesia vs. Jacquet Metal Service | Telkom Indonesia vs. Perseus Mining Limited | Telkom Indonesia vs. SINGAPORE AIRLINES | Telkom Indonesia vs. International Consolidated Airlines |
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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