Correlation Between Telkom Indonesia and BANK MANDIRI
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and BANK MANDIRI 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 BANK MANDIRI 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 BANK MANDIRI, you can compare the effects of market volatilities on Telkom Indonesia and BANK MANDIRI 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 BANK MANDIRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and BANK MANDIRI.
Diversification Opportunities for Telkom Indonesia and BANK MANDIRI
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telkom and BANK is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI 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 BANK MANDIRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK MANDIRI has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and BANK MANDIRI go up and down completely randomly.
Pair Corralation between Telkom Indonesia and BANK MANDIRI
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 2.05 times more return on investment than BANK MANDIRI. However, Telkom Indonesia is 2.05 times more volatile than BANK MANDIRI. It trades about 0.07 of its potential returns per unit of risk. BANK MANDIRI is currently generating about -0.06 per unit of risk. If you would invest 16.00 in Telkom Indonesia Tbk on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Telkom Indonesia Tbk or generate 6.25% 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. BANK MANDIRI
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| BANK MANDIRI |
Telkom Indonesia and BANK MANDIRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and BANK MANDIRI
The main advantage of trading using opposite Telkom Indonesia and BANK MANDIRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, BANK MANDIRI 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 BANK MANDIRI will offset losses from the drop in BANK MANDIRI's long position.| Telkom Indonesia vs. Verizon Communications | Telkom Indonesia vs. ATT Inc | Telkom Indonesia vs. ATT Inc | Telkom Indonesia vs. Deutsche Telekom AG |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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