Correlation Between Telkom Indonesia and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Magnachip Semiconductor 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 Telkom Indonesia and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telkom Indonesia Tbk and Magnachip Semiconductor, you can compare the effects of market volatilities on Telkom Indonesia and Magnachip Semiconductor 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 Telkom Indonesia with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Magnachip Semiconductor.
Diversification Opportunities for Telkom Indonesia and Magnachip Semiconductor
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telkom and Magnachip is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and Telkom Indonesia 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 Telkom Indonesia Tbk are associated (or correlated) with Magnachip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnachip Semiconductor has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Magnachip Semiconductor
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 1.35 times more return on investment than Magnachip Semiconductor. However, Telkom Indonesia is 1.35 times more volatile than Magnachip Semiconductor. It trades about -0.02 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.09 per unit of risk. If you would invest 25.00 in Telkom Indonesia Tbk on August 31, 2024 and sell it today you would lose (10.00) from holding Telkom Indonesia Tbk or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Magnachip Semiconductor
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Magnachip Semiconductor |
Telkom Indonesia and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Magnachip Semiconductor
The main advantage of trading using opposite Telkom Indonesia and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Magnachip Semiconductor 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 Magnachip Semiconductor will offset losses from the drop in Magnachip Semiconductor's long position.| Telkom Indonesia vs. SIVERS SEMICONDUCTORS AB | Telkom Indonesia vs. Darden Restaurants | Telkom Indonesia vs. Reliance Steel Aluminum | Telkom Indonesia vs. Q2M Managementberatung AG |
| Magnachip Semiconductor vs. NVIDIA | Magnachip Semiconductor vs. Taiwan Semiconductor Manufacturing | Magnachip Semiconductor vs. Intel |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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