Correlation Between Telkom Indonesia and Vidrala SA
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Vidrala SA 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 Vidrala SA 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 Vidrala SA, you can compare the effects of market volatilities on Telkom Indonesia and Vidrala SA 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 Vidrala SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Vidrala SA.
Diversification Opportunities for Telkom Indonesia and Vidrala SA
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Vidrala is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Vidrala SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vidrala SA 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 Vidrala SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vidrala SA has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Vidrala SA go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Vidrala SA
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 6.25 times more return on investment than Vidrala SA. However, Telkom Indonesia is 6.25 times more volatile than Vidrala SA. It trades about 0.08 of its potential returns per unit of risk. Vidrala SA is currently generating about 0.05 per unit of risk. If you would invest 14.00 in Telkom Indonesia Tbk on September 15, 2024 and sell it today you would earn a total of 1.00 from holding Telkom Indonesia Tbk or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Vidrala SA
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Vidrala SA |
Telkom Indonesia and Vidrala SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Vidrala SA
The main advantage of trading using opposite Telkom Indonesia and Vidrala SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Vidrala SA 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 Vidrala SA will offset losses from the drop in Vidrala SA's long position.| Telkom Indonesia vs. Jacquet Metal Service | Telkom Indonesia vs. Perseus Mining Limited | Telkom Indonesia vs. SINGAPORE AIRLINES | Telkom Indonesia vs. International Consolidated Airlines |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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