Correlation Between Telkom Indonesia and AMA Group
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and AMA Group 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 AMA Group 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 AMA Group Limited, you can compare the effects of market volatilities on Telkom Indonesia and AMA Group 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 AMA Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and AMA Group.
Diversification Opportunities for Telkom Indonesia and AMA Group
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and AMA is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and AMA Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMA Group Limited 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 AMA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMA Group Limited has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and AMA Group go up and down completely randomly.
Pair Corralation between Telkom Indonesia and AMA Group
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the AMA Group. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 46.14 times less risky than AMA Group. The stock trades about -0.07 of its potential returns per unit of risk. The AMA Group Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 8.00 in AMA Group Limited on September 3, 2024 and sell it today you would lose (3.25) from holding AMA Group Limited or give up 40.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. AMA Group Limited
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| AMA Group Limited |
Telkom Indonesia and AMA Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and AMA Group
The main advantage of trading using opposite Telkom Indonesia and AMA Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, AMA Group 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 AMA Group will offset losses from the drop in AMA Group's long position.| Telkom Indonesia vs. Highway Holdings Limited | Telkom Indonesia vs. QCR Holdings | Telkom Indonesia vs. Partner Communications | Telkom Indonesia vs. Acumen Pharmaceuticals |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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