Correlation Between State Bank and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both State Bank 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 State Bank and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and Telkom Indonesia Tbk, you can compare the effects of market volatilities on State Bank 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 State Bank with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Telkom Indonesia.
Diversification Opportunities for State Bank and Telkom Indonesia
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between State and Telkom is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of 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 State Bank 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 State Bank of 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 State Bank i.e., State Bank and Telkom Indonesia go up and down completely randomly.
Pair Corralation between State Bank and Telkom Indonesia
Assuming the 90 days horizon State Bank of is expected to generate 1.64 times more return on investment than Telkom Indonesia. However, State Bank is 1.64 times more volatile than Telkom Indonesia Tbk. It trades about 0.05 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.07 per unit of risk. If you would invest 8,800 in State Bank of on September 2, 2024 and sell it today you would earn a total of 450.00 from holding State Bank of or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| State Bank |
| Telkom Indonesia Tbk |
State Bank and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Telkom Indonesia
The main advantage of trading using opposite State Bank and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank 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.| State Bank vs. Tower One Wireless | State Bank vs. 24SEVENOFFICE GROUP AB | State Bank vs. BORR DRILLING NEW | State Bank vs. THAI BEVERAGE |
| Telkom Indonesia vs. Magic Software Enterprises | Telkom Indonesia vs. CN MODERN DAIRY | Telkom Indonesia vs. LIFEWAY FOODS | Telkom Indonesia vs. PREMIER FOODS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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