Correlation Between Telkom Indonesia and PT Bumi
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and PT Bumi 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 PT Bumi 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 PT Bumi Resources, you can compare the effects of market volatilities on Telkom Indonesia and PT Bumi 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 PT Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and PT Bumi.
Diversification Opportunities for Telkom Indonesia and PT Bumi
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Telkom and PJM is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and PT Bumi Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bumi Resources 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 PT Bumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bumi Resources has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and PT Bumi go up and down completely randomly.
Pair Corralation between Telkom Indonesia and PT Bumi
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 1.22 times more return on investment than PT Bumi. However, Telkom Indonesia is 1.22 times more volatile than PT Bumi Resources. It trades about 0.02 of its potential returns per unit of risk. PT Bumi Resources is currently generating about -0.04 per unit of risk. If you would invest 15.00 in Telkom Indonesia Tbk on November 29, 2024 and sell it today you would lose (2.00) from holding Telkom Indonesia Tbk or give up 13.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. PT Bumi Resources
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| PT Bumi Resources |
Telkom Indonesia and PT Bumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and PT Bumi
The main advantage of trading using opposite Telkom Indonesia and PT Bumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, PT Bumi 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 PT Bumi will offset losses from the drop in PT Bumi's long position.| Telkom Indonesia vs. Emperor Entertainment Hotel | Telkom Indonesia vs. Playa Hotels Resorts | Telkom Indonesia vs. Meli Hotels International | Telkom Indonesia vs. USWE SPORTS AB |
| PT Bumi vs. CHRYSALIS INVESTMENTS LTD | PT Bumi vs. MidCap Financial Investment | PT Bumi vs. De Grey Mining | PT Bumi vs. Marie Brizard Wine |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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