Correlation Between Telkom Indonesia and 1606 Corp
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and 1606 Corp 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 1606 Corp 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 1606 Corp, you can compare the effects of market volatilities on Telkom Indonesia and 1606 Corp 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 1606 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and 1606 Corp.
Diversification Opportunities for Telkom Indonesia and 1606 Corp
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telkom and 1606 is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and 1606 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1606 Corp 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 1606 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1606 Corp has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and 1606 Corp go up and down completely randomly.
Pair Corralation between Telkom Indonesia and 1606 Corp
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the 1606 Corp. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 8.74 times less risky than 1606 Corp. The stock trades about -0.17 of its potential returns per unit of risk. The 1606 Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1.40 in 1606 Corp on August 25, 2024 and sell it today you would lose (0.20) from holding 1606 Corp or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. 1606 Corp
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| 1606 Corp |
Telkom Indonesia and 1606 Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and 1606 Corp
The main advantage of trading using opposite Telkom Indonesia and 1606 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, 1606 Corp 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 1606 Corp will offset losses from the drop in 1606 Corp's long position.| Telkom Indonesia vs. Liberty Broadband Srs | Telkom Indonesia vs. Cable One | Telkom Indonesia vs. Liberty Broadband Corp | Telkom Indonesia vs. Liberty Global PLC |
| 1606 Corp vs. British American Tobacco | 1606 Corp vs. Imperial Brands PLC | 1606 Corp vs. RLX Technology | 1606 Corp vs. British American Tobacco |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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