Correlation Between Telkom Indonesia and PT Bank
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and PT Bank 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 Bank 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 Bank Mandiri, you can compare the effects of market volatilities on Telkom Indonesia and PT Bank 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 Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and PT Bank.
Diversification Opportunities for Telkom Indonesia and PT Bank
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telkom and PQ9 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and PT Bank Mandiri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Mandiri has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and PT Bank go up and down completely randomly.
Pair Corralation between Telkom Indonesia and PT Bank
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 1.31 times more return on investment than PT Bank. However, Telkom Indonesia is 1.31 times more volatile than PT Bank Mandiri. It trades about 0.03 of its potential returns per unit of risk. PT Bank Mandiri is currently generating about 0.04 per unit of risk. If you would invest 17.00 in Telkom Indonesia Tbk on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Telkom Indonesia Tbk or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. PT Bank Mandiri
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| PT Bank Mandiri |
Telkom Indonesia and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and PT Bank
The main advantage of trading using opposite Telkom Indonesia and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, PT Bank 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 Bank will offset losses from the drop in PT Bank's long position.| Telkom Indonesia vs. Molson Coors Beverage | Telkom Indonesia vs. HomeToGo SE | Telkom Indonesia vs. MAVEN WIRELESS SWEDEN | Telkom Indonesia vs. Fevertree Drinks PLC |
| PT Bank vs. CODERE ONLINE LUX | PT Bank vs. Sumitomo Chemical | PT Bank vs. British American Tobacco | PT Bank vs. TIANDE CHEMICAL |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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