Correlation Between Telkom Indonesia and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Lundin Mining 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 Lundin Mining 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 Lundin Mining, you can compare the effects of market volatilities on Telkom Indonesia and Lundin Mining 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 Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Lundin Mining.
Diversification Opportunities for Telkom Indonesia and Lundin Mining
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Lundin is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining 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 Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Lundin Mining go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Lundin Mining
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Lundin Mining. In addition to that, Telkom Indonesia is 3.32 times more volatile than Lundin Mining. It trades about -0.01 of its total potential returns per unit of risk. Lundin Mining is currently generating about -0.03 per unit of volatility. If you would invest 906.00 in Lundin Mining on September 13, 2024 and sell it today you would lose (15.00) from holding Lundin Mining or give up 1.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Lundin Mining
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Lundin Mining |
Telkom Indonesia and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Lundin Mining
The main advantage of trading using opposite Telkom Indonesia and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Lundin Mining 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 Lundin Mining will offset losses from the drop in Lundin Mining's long position.| Telkom Indonesia vs. BW OFFSHORE LTD | Telkom Indonesia vs. Eidesvik Offshore ASA | Telkom Indonesia vs. SOLSTAD OFFSHORE NK | Telkom Indonesia vs. WT OFFSHORE |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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