Correlation Between Telkom Indonesia and Johnson Electric
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Johnson Electric 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 Johnson Electric 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 Johnson Electric Holdings, you can compare the effects of market volatilities on Telkom Indonesia and Johnson Electric 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 Johnson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Johnson Electric.
Diversification Opportunities for Telkom Indonesia and Johnson Electric
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and Johnson is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Johnson Electric Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Electric 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 Johnson Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Electric Holdings has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Johnson Electric go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Johnson Electric
Assuming the 90 days trading horizon Telkom Indonesia is expected to generate 2.5 times less return on investment than Johnson Electric. In addition to that, Telkom Indonesia is 1.63 times more volatile than Johnson Electric Holdings. It trades about 0.02 of its total potential returns per unit of risk. Johnson Electric Holdings is currently generating about 0.07 per unit of volatility. If you would invest 54.00 in Johnson Electric Holdings on September 4, 2024 and sell it today you would earn a total of 78.00 from holding Johnson Electric Holdings or generate 144.44% 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. Johnson Electric Holdings
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Johnson Electric Holdings |
Telkom Indonesia and Johnson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Johnson Electric
The main advantage of trading using opposite Telkom Indonesia and Johnson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Johnson Electric 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 Johnson Electric will offset losses from the drop in Johnson Electric's long position.| Telkom Indonesia vs. G III Apparel Group | Telkom Indonesia vs. KIMBALL ELECTRONICS | Telkom Indonesia vs. Methode Electronics | Telkom Indonesia vs. Benchmark Electronics |
| Johnson Electric vs. GameStop Corp | Johnson Electric vs. Ares Management Corp | Johnson Electric vs. International Game Technology | Johnson Electric vs. EPSILON HEALTHCARE 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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