Correlation Between Telefast Indonesia and Indocement Tunggal
Can any of the company-specific risk be diversified away by investing in both Telefast Indonesia and Indocement Tunggal 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 Telefast Indonesia and Indocement Tunggal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefast Indonesia and Indocement Tunggal Prakarsa, you can compare the effects of market volatilities on Telefast Indonesia and Indocement Tunggal 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 Telefast Indonesia with a short position of Indocement Tunggal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefast Indonesia and Indocement Tunggal.
Diversification Opportunities for Telefast Indonesia and Indocement Tunggal
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telefast and Indocement is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Telefast Indonesia and Indocement Tunggal Prakarsa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indocement Tunggal and Telefast 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 Telefast Indonesia are associated (or correlated) with Indocement Tunggal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indocement Tunggal has no effect on the direction of Telefast Indonesia i.e., Telefast Indonesia and Indocement Tunggal go up and down completely randomly.
Pair Corralation between Telefast Indonesia and Indocement Tunggal
Assuming the 90 days trading horizon Telefast Indonesia is expected to under-perform the Indocement Tunggal. In addition to that, Telefast Indonesia is 3.42 times more volatile than Indocement Tunggal Prakarsa. It trades about -0.08 of its total potential returns per unit of risk. Indocement Tunggal Prakarsa is currently generating about -0.06 per unit of volatility. If you would invest 1,106,781 in Indocement Tunggal Prakarsa on November 4, 2024 and sell it today you would lose (516,781) from holding Indocement Tunggal Prakarsa or give up 46.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Telefast Indonesia vs. Indocement Tunggal Prakarsa
Performance |
| Timeline |
| Telefast Indonesia |
| Indocement Tunggal |
Telefast Indonesia and Indocement Tunggal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefast Indonesia and Indocement Tunggal
The main advantage of trading using opposite Telefast Indonesia and Indocement Tunggal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefast Indonesia position performs unexpectedly, Indocement Tunggal 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 Indocement Tunggal will offset losses from the drop in Indocement Tunggal's long position.| Telefast Indonesia vs. Digital Mediatama Maxima | Telefast Indonesia vs. NFC Indonesia PT | Telefast Indonesia vs. M Cash Integrasi | Telefast Indonesia vs. Nusantara Voucher Distribution |
| Indocement Tunggal vs. Semen Indonesia Persero | Indocement Tunggal vs. United Tractors Tbk | Indocement Tunggal vs. PT Indofood Sukses | Indocement Tunggal vs. Kalbe Farma Tbk |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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