Correlation Between Telkom Indonesia and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and SENECA FOODS-A 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 SENECA FOODS-A 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 SENECA FOODS A, you can compare the effects of market volatilities on Telkom Indonesia and SENECA FOODS-A 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 SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and SENECA FOODS-A.
Diversification Opportunities for Telkom Indonesia and SENECA FOODS-A
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and SENECA is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and SENECA FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENECA FOODS A 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 SENECA FOODS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENECA FOODS A has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between Telkom Indonesia and SENECA FOODS-A
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the SENECA FOODS-A. In addition to that, Telkom Indonesia is 2.1 times more volatile than SENECA FOODS A. It trades about -0.02 of its total potential returns per unit of risk. SENECA FOODS A is currently generating about 0.3 per unit of volatility. If you would invest 5,550 in SENECA FOODS A on September 4, 2024 and sell it today you would earn a total of 1,050 from holding SENECA FOODS A or generate 18.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. SENECA FOODS A
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| SENECA FOODS A |
Telkom Indonesia and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and SENECA FOODS-A
The main advantage of trading using opposite Telkom Indonesia and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, SENECA FOODS-A 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 SENECA FOODS-A will offset losses from the drop in SENECA FOODS-A's long position.| Telkom Indonesia vs. G III Apparel Group | Telkom Indonesia vs. KIMBALL ELECTRONICS | Telkom Indonesia vs. Methode Electronics | Telkom Indonesia vs. Benchmark Electronics |
| SENECA FOODS-A vs. TOTAL GABON | SENECA FOODS-A vs. Walgreens Boots Alliance | SENECA FOODS-A vs. Peak Resources Limited |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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