Correlation Between Telkom Indonesia and China Resources
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and China Resources 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 China Resources 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 China Resources Cement, you can compare the effects of market volatilities on Telkom Indonesia and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and China Resources.
Diversification Opportunities for Telkom Indonesia and China Resources
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and China is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and China Resources Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Cement 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Cement has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and China Resources go up and down completely randomly.
Pair Corralation between Telkom Indonesia and China Resources
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the China Resources. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 2.57 times less risky than China Resources. The stock trades about -0.03 of its potential returns per unit of risk. The China Resources Cement is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 572.00 in China Resources Cement on September 3, 2024 and sell it today you would earn a total of 163.00 from holding China Resources Cement or generate 28.5% 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. China Resources Cement
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| China Resources Cement |
Telkom Indonesia and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and China Resources
The main advantage of trading using opposite Telkom Indonesia and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| Telkom Indonesia vs. Highway Holdings Limited | Telkom Indonesia vs. QCR Holdings | Telkom Indonesia vs. Partner Communications | Telkom Indonesia vs. Acumen Pharmaceuticals |
| China Resources vs. Cementos Pacasmayo SAA | China Resources vs. Summit Materials | China Resources vs. Eagle Materials | China Resources vs. CRH PLC ADR |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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