Correlation Between Telkom Indonesia and Ally Financial
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Ally Financial 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 Ally Financial 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 Ally Financial, you can compare the effects of market volatilities on Telkom Indonesia and Ally Financial 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 Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Ally Financial.
Diversification Opportunities for Telkom Indonesia and Ally Financial
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Ally is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial 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 Ally Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Ally Financial go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Ally Financial
Assuming the 90 days trading horizon Telkom Indonesia is expected to generate 1.82 times less return on investment than Ally Financial. In addition to that, Telkom Indonesia is 2.35 times more volatile than Ally Financial. It trades about 0.01 of its total potential returns per unit of risk. Ally Financial is currently generating about 0.05 per unit of volatility. If you would invest 2,396 in Ally Financial on September 26, 2024 and sell it today you would earn a total of 937.00 from holding Ally Financial or generate 39.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Ally Financial
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Ally Financial |
Telkom Indonesia and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Ally Financial
The main advantage of trading using opposite Telkom Indonesia and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Ally Financial 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 Ally Financial will offset losses from the drop in Ally Financial's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. ATT Inc | Telkom Indonesia vs. ATT Inc | Telkom Indonesia vs. Deutsche Telekom AG |
| Ally Financial vs. Far East Horizon | Ally Financial vs. Walker Dunlop | Ally Financial vs. Paragon Banking Group | Ally Financial vs. Hercules Capital |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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