Correlation Between Telkom Indonesia and Altria
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Altria 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 Altria 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 Altria Group, you can compare the effects of market volatilities on Telkom Indonesia and Altria 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 Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Altria.
Diversification Opportunities for Telkom Indonesia and Altria
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and Altria is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group 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 Altria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altria Group has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Altria go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Altria
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Altria. In addition to that, Telkom Indonesia is 2.98 times more volatile than Altria Group. It trades about -0.02 of its total potential returns per unit of risk. Altria Group is currently generating about 0.39 per unit of volatility. If you would invest 4,638 in Altria Group on August 30, 2024 and sell it today you would earn a total of 842.00 from holding Altria Group or generate 18.15% 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. Altria Group
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Altria Group |
Telkom Indonesia and Altria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Altria
The main advantage of trading using opposite Telkom Indonesia and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Altria 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 Altria will offset losses from the drop in Altria's long position.| Telkom Indonesia vs. Hanison Construction Holdings | Telkom Indonesia vs. British American Tobacco | Telkom Indonesia vs. Japan Tobacco | Telkom Indonesia vs. Singapore Telecommunications Limited |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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