Correlation Between Telkom Indonesia and Zalando SE
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Zalando 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 Zalando 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 Zalando SE, you can compare the effects of market volatilities on Telkom Indonesia and Zalando 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 Zalando SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Zalando SE.
Diversification Opportunities for Telkom Indonesia and Zalando SE
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Zalando is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Zalando SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zalando 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 Zalando SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zalando SE has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Zalando SE go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Zalando SE
Assuming the 90 days trading horizon Telkom Indonesia is expected to generate 2.41 times less return on investment than Zalando SE. In addition to that, Telkom Indonesia is 2.15 times more volatile than Zalando SE. It trades about 0.01 of its total potential returns per unit of risk. Zalando SE is currently generating about 0.07 per unit of volatility. If you would invest 2,439 in Zalando SE on September 1, 2024 and sell it today you would earn a total of 499.00 from holding Zalando SE or generate 20.46% 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. Zalando SE
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Zalando SE |
Telkom Indonesia and Zalando SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Zalando SE
The main advantage of trading using opposite Telkom Indonesia and Zalando SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Zalando 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 Zalando SE will offset losses from the drop in Zalando SE's long position.| Telkom Indonesia vs. SIVERS SEMICONDUCTORS AB | Telkom Indonesia vs. Darden Restaurants | Telkom Indonesia vs. Reliance Steel Aluminum | Telkom Indonesia vs. Q2M Managementberatung AG |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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