Correlation Between Telkom Indonesia and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Telkom Indonesia and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Dow Jones.
Diversification Opportunities for Telkom Indonesia and Dow Jones
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Dow is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Dow Jones go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Dow Jones
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 7.45 times more return on investment than Dow Jones. However, Telkom Indonesia is 7.45 times more volatile than Dow Jones Industrial. It trades about 0.01 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 25.00 in Telkom Indonesia Tbk on August 26, 2024 and sell it today you would lose (9.00) from holding Telkom Indonesia Tbk or give up 36.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.22% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Dow Jones Industrial
Performance |
| Timeline |
Telkom Indonesia and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Telkom Indonesia Tbk
Pair trading matchups for Telkom Indonesia
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Telkom Indonesia and Dow Jones
The main advantage of trading using opposite Telkom Indonesia and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Telkom Indonesia vs. TRAINLINE PLC LS | Telkom Indonesia vs. KAUFMAN ET BROAD | Telkom Indonesia vs. Transportadora de Gas | Telkom Indonesia vs. Texas Roadhouse |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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