Correlation Between Telkom Indonesia and Shoprite Holdings
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Shoprite 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 Shoprite 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 Shoprite Holdings Limited, you can compare the effects of market volatilities on Telkom Indonesia and Shoprite 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 Shoprite Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Shoprite Holdings.
Diversification Opportunities for Telkom Indonesia and Shoprite Holdings
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telkom and Shoprite is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Shoprite Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite 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 Shoprite Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoprite Holdings has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Shoprite Holdings go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Shoprite Holdings
Assuming the 90 days trading horizon Telkom Indonesia is expected to generate 1.09 times less return on investment than Shoprite Holdings. In addition to that, Telkom Indonesia is 3.07 times more volatile than Shoprite Holdings Limited. It trades about 0.01 of its total potential returns per unit of risk. Shoprite Holdings Limited is currently generating about 0.03 per unit of volatility. If you would invest 1,024 in Shoprite Holdings Limited on January 15, 2025 and sell it today you would earn a total of 206.00 from holding Shoprite Holdings Limited or generate 20.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Shoprite Holdings Limited
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Shoprite Holdings |
Telkom Indonesia and Shoprite Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Shoprite Holdings
The main advantage of trading using opposite Telkom Indonesia and Shoprite Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Shoprite 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 Shoprite Holdings will offset losses from the drop in Shoprite Holdings' long position.| Telkom Indonesia vs. Sqs Software Quality | Telkom Indonesia vs. COGNYTE SOFTWARE LTD | Telkom Indonesia vs. FARO Technologies | Telkom Indonesia vs. Digilife Technologies Limited |
| Shoprite Holdings vs. BANK OF CHINA | Shoprite Holdings vs. Direct Line Insurance | Shoprite Holdings vs. NXP Semiconductors NV | Shoprite Holdings vs. Nordic Semiconductor ASA |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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