Correlation Between Telkom Indonesia and Herc Holdings
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Herc Holdings 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 Herc Holdings 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 Herc Holdings, you can compare the effects of market volatilities on Telkom Indonesia and Herc Holdings 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 Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Herc Holdings.
Diversification Opportunities for Telkom Indonesia and Herc Holdings
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and Herc is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings 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 Herc Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Herc Holdings go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Herc Holdings
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Herc Holdings. In addition to that, Telkom Indonesia is 2.23 times more volatile than Herc Holdings. It trades about 0.0 of its total potential returns per unit of risk. Herc Holdings is currently generating about 0.09 per unit of volatility. If you would invest 14,050 in Herc Holdings on August 27, 2024 and sell it today you would earn a total of 6,750 from holding Herc Holdings or generate 48.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Herc Holdings
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Herc Holdings |
Telkom Indonesia and Herc Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Herc Holdings
The main advantage of trading using opposite Telkom Indonesia and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Herc Holdings 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 Herc Holdings will offset losses from the drop in Herc Holdings' long position.| Telkom Indonesia vs. GALENA MINING LTD | Telkom Indonesia vs. ETFS Coffee ETC | Telkom Indonesia vs. SERI INDUSTRIAL EO | Telkom Indonesia vs. Evolution Mining Limited |
| Herc Holdings vs. Algonquin Power Utilities | Herc Holdings vs. Renesas Electronics | Herc Holdings vs. Meiko Electronics Co | Herc Holdings vs. IDP EDUCATION LTD |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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