Correlation Between Telkom Indonesia and NEW MILLENNIUM
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and NEW MILLENNIUM 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 NEW MILLENNIUM 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 NEW MILLENNIUM IRON, you can compare the effects of market volatilities on Telkom Indonesia and NEW MILLENNIUM 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 NEW MILLENNIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and NEW MILLENNIUM.
Diversification Opportunities for Telkom Indonesia and NEW MILLENNIUM
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and NEW is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and NEW MILLENNIUM IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW MILLENNIUM IRON 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 NEW MILLENNIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW MILLENNIUM IRON has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and NEW MILLENNIUM go up and down completely randomly.
Pair Corralation between Telkom Indonesia and NEW MILLENNIUM
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the NEW MILLENNIUM. In addition to that, Telkom Indonesia is 3.39 times more volatile than NEW MILLENNIUM IRON. It trades about -0.05 of its total potential returns per unit of risk. NEW MILLENNIUM IRON is currently generating about 0.08 per unit of volatility. If you would invest 725.00 in NEW MILLENNIUM IRON on October 25, 2024 and sell it today you would earn a total of 20.00 from holding NEW MILLENNIUM IRON or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. NEW MILLENNIUM IRON
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| NEW MILLENNIUM IRON |
Telkom Indonesia and NEW MILLENNIUM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and NEW MILLENNIUM
The main advantage of trading using opposite Telkom Indonesia and NEW MILLENNIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, NEW MILLENNIUM 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 NEW MILLENNIUM will offset losses from the drop in NEW MILLENNIUM's long position.| Telkom Indonesia vs. ANTA SPORTS PRODUCT | Telkom Indonesia vs. Micron Technology | Telkom Indonesia vs. Align Technology | Telkom Indonesia vs. MACOM Technology Solutions |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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