Correlation Between Telkom Indonesia and United Rentals
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and United Rentals 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 United Rentals 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 United Rentals, you can compare the effects of market volatilities on Telkom Indonesia and United Rentals 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 United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and United Rentals.
Diversification Opportunities for Telkom Indonesia and United Rentals
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and United is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals 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 United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and United Rentals go up and down completely randomly.
Pair Corralation between Telkom Indonesia and United Rentals
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the United Rentals. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 2.99 times less risky than United Rentals. The stock trades about -0.21 of its potential returns per unit of risk. The United Rentals is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 72,235 in United Rentals on September 4, 2024 and sell it today you would earn a total of 9,405 from holding United Rentals or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. United Rentals
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| United Rentals |
Telkom Indonesia and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and United Rentals
The main advantage of trading using opposite Telkom Indonesia and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, United Rentals 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 United Rentals will offset losses from the drop in United Rentals' long position.| Telkom Indonesia vs. United Rentals | Telkom Indonesia vs. WILLIS LEASE FIN | Telkom Indonesia vs. MUTUIONLINE | Telkom Indonesia vs. Lamar Advertising |
| United Rentals vs. Ashtead Group plc | United Rentals vs. WillScot Mobile Mini | United Rentals vs. Sixt SE |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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