Correlation Between Telkom Indonesia and Sempra
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Sempra 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 Sempra 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 Sempra, you can compare the effects of market volatilities on Telkom Indonesia and Sempra 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 Sempra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Sempra.
Diversification Opportunities for Telkom Indonesia and Sempra
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and Sempra is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Sempra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempra 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 Sempra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempra has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Sempra go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Sempra
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Sempra. In addition to that, Telkom Indonesia is 2.58 times more volatile than Sempra. It trades about -0.02 of its total potential returns per unit of risk. Sempra is currently generating about 0.29 per unit of volatility. If you would invest 7,850 in Sempra on August 28, 2024 and sell it today you would earn a total of 1,154 from holding Sempra or generate 14.7% 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. Sempra
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Sempra |
Telkom Indonesia and Sempra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Sempra
The main advantage of trading using opposite Telkom Indonesia and Sempra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Sempra 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 Sempra will offset losses from the drop in Sempra's long position.The idea behind Telkom Indonesia Tbk and Sempra pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sempra vs. Superior Plus Corp | Sempra vs. NMI Holdings | Sempra vs. Origin Agritech | Sempra vs. SIVERS SEMICONDUCTORS AB |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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