Correlation Between Telkom Indonesia and RETAIL FOOD
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and RETAIL FOOD 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 RETAIL FOOD 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 RETAIL FOOD GROUP, you can compare the effects of market volatilities on Telkom Indonesia and RETAIL FOOD 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 RETAIL FOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and RETAIL FOOD.
Diversification Opportunities for Telkom Indonesia and RETAIL FOOD
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and RETAIL is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and RETAIL FOOD GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RETAIL FOOD GROUP 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 RETAIL FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RETAIL FOOD GROUP has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and RETAIL FOOD go up and down completely randomly.
Pair Corralation between Telkom Indonesia and RETAIL FOOD
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the RETAIL FOOD. In addition to that, Telkom Indonesia is 2.62 times more volatile than RETAIL FOOD GROUP. It trades about -0.01 of its total potential returns per unit of risk. RETAIL FOOD GROUP is currently generating about 0.24 per unit of volatility. If you would invest 3.70 in RETAIL FOOD GROUP on September 2, 2024 and sell it today you would earn a total of 0.50 from holding RETAIL FOOD GROUP or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. RETAIL FOOD GROUP
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| RETAIL FOOD GROUP |
Telkom Indonesia and RETAIL FOOD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and RETAIL FOOD
The main advantage of trading using opposite Telkom Indonesia and RETAIL FOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, RETAIL FOOD 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 RETAIL FOOD will offset losses from the drop in RETAIL FOOD's long position.| Telkom Indonesia vs. Soken Chemical Engineering | Telkom Indonesia vs. KINGBOARD CHEMICAL | Telkom Indonesia vs. Eastman Chemical | Telkom Indonesia vs. Chesapeake Utilities |
| RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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