Correlation Between Telkom Indonesia and Guidewire Software
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Guidewire Software 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 Guidewire Software 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 Guidewire Software, you can compare the effects of market volatilities on Telkom Indonesia and Guidewire Software 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 Guidewire Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Guidewire Software.
Diversification Opportunities for Telkom Indonesia and Guidewire Software
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and Guidewire is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software 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 Guidewire Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Guidewire Software go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Guidewire Software
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Guidewire Software. In addition to that, Telkom Indonesia is 3.39 times more volatile than Guidewire Software. It trades about -0.02 of its total potential returns per unit of risk. Guidewire Software is currently generating about 0.34 per unit of volatility. If you would invest 13,175 in Guidewire Software on September 2, 2024 and sell it today you would earn a total of 5,890 from holding Guidewire Software or generate 44.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Guidewire Software
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Guidewire Software |
Telkom Indonesia and Guidewire Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Guidewire Software
The main advantage of trading using opposite Telkom Indonesia and Guidewire Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Guidewire Software 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 Guidewire Software will offset losses from the drop in Guidewire Software's long position.| Telkom Indonesia vs. KIMBALL ELECTRONICS | Telkom Indonesia vs. Meiko Electronics Co | Telkom Indonesia vs. LPKF Laser Electronics | Telkom Indonesia vs. Ryanair Holdings plc |
| Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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