Correlation Between Telkom Indonesia and Vonovia SE
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Vonovia SE 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 Vonovia SE 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 Vonovia SE, you can compare the effects of market volatilities on Telkom Indonesia and Vonovia SE 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 Vonovia SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Vonovia SE.
Diversification Opportunities for Telkom Indonesia and Vonovia SE
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telkom and Vonovia is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Vonovia SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vonovia SE 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 Vonovia SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vonovia SE has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Vonovia SE go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Vonovia SE
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 3.21 times more return on investment than Vonovia SE. However, Telkom Indonesia is 3.21 times more volatile than Vonovia SE. It trades about 0.08 of its potential returns per unit of risk. Vonovia SE is currently generating about 0.07 per unit of risk. If you would invest 16.00 in Telkom Indonesia Tbk on August 31, 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. Vonovia SE
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Vonovia SE |
Telkom Indonesia and Vonovia SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Vonovia SE
The main advantage of trading using opposite Telkom Indonesia and Vonovia SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Vonovia SE 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 Vonovia SE will offset losses from the drop in Vonovia SE's long position.| Telkom Indonesia vs. Westinghouse Air Brake | Telkom Indonesia vs. Altair Engineering | Telkom Indonesia vs. Ryanair Holdings plc | Telkom Indonesia vs. XLMedia PLC |
| Vonovia SE vs. CBRE Group Class | Vonovia SE vs. Wharf Real Estate | Vonovia SE vs. Superior Plus Corp | Vonovia SE vs. NMI Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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