Correlation Between Telkom Indonesia and Valero Energy
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Valero Energy 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 Valero Energy 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 Valero Energy, you can compare the effects of market volatilities on Telkom Indonesia and Valero Energy 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 Valero Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Valero Energy.
Diversification Opportunities for Telkom Indonesia and Valero Energy
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Valero is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Valero Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy 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 Valero Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valero Energy has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Valero Energy go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Valero Energy
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 2.88 times more return on investment than Valero Energy. However, Telkom Indonesia is 2.88 times more volatile than Valero Energy. It trades about 0.01 of its potential returns per unit of risk. Valero Energy is currently generating about 0.01 per unit of risk. If you would invest 19.00 in Telkom Indonesia Tbk on September 21, 2024 and sell it today you would lose (6.00) from holding Telkom Indonesia Tbk or give up 31.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Valero Energy
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Valero Energy |
Telkom Indonesia and Valero Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Valero Energy
The main advantage of trading using opposite Telkom Indonesia and Valero Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Valero Energy 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 Valero Energy will offset losses from the drop in Valero Energy's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. China Mobile Limited | Telkom Indonesia vs. Verizon Communications | Telkom Indonesia vs. ATT Inc |
| Valero Energy vs. Zoom Video Communications | Valero Energy vs. Iridium Communications | Valero Energy vs. Entravision Communications | Valero Energy vs. ADRIATIC METALS LS 013355 |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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