Correlation Between Telkom Indonesia and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Hercules Capital 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 Hercules Capital 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 Hercules Capital, you can compare the effects of market volatilities on Telkom Indonesia and Hercules Capital 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 Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Hercules Capital.
Diversification Opportunities for Telkom Indonesia and Hercules Capital
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Hercules is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital 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 Hercules Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Capital has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Hercules Capital go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Hercules Capital
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 8.89 times more return on investment than Hercules Capital. However, Telkom Indonesia is 8.89 times more volatile than Hercules Capital. It trades about 0.11 of its potential returns per unit of risk. Hercules Capital is currently generating about 0.08 per unit of risk. If you would invest 15.00 in Telkom Indonesia Tbk on September 25, 2024 and sell it today you would earn a total of 2.00 from holding Telkom Indonesia Tbk or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Hercules Capital
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Hercules Capital |
Telkom Indonesia and Hercules Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Hercules Capital
The main advantage of trading using opposite Telkom Indonesia and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Hercules Capital 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 Hercules Capital will offset losses from the drop in Hercules Capital's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. ATT Inc | Telkom Indonesia vs. ATT Inc | Telkom Indonesia vs. Deutsche Telekom AG |
| Hercules Capital vs. HEMISPHERE EGY | Hercules Capital vs. Spirent Communications plc | Hercules Capital vs. Sixt Leasing SE | Hercules Capital vs. United Internet AG |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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