Correlation Between Telkom Indonesia and Canadian Western
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Canadian Western 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 Canadian Western 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 Canadian Western Bank, you can compare the effects of market volatilities on Telkom Indonesia and Canadian Western 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 Canadian Western. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Canadian Western.
Diversification Opportunities for Telkom Indonesia and Canadian Western
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Telkom and Canadian is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Canadian Western Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Western Bank 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 Canadian Western. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Western Bank has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Canadian Western go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Canadian Western
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Canadian Western. In addition to that, Telkom Indonesia is 2.26 times more volatile than Canadian Western Bank. It trades about -0.19 of its total potential returns per unit of risk. Canadian Western Bank is currently generating about -0.3 per unit of volatility. If you would invest 4,092 in Canadian Western Bank on November 28, 2024 and sell it today you would lose (121.00) from holding Canadian Western Bank or give up 2.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 40.91% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Canadian Western Bank
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Canadian Western Bank |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Telkom Indonesia and Canadian Western Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Canadian Western
The main advantage of trading using opposite Telkom Indonesia and Canadian Western positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Canadian Western 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 Canadian Western will offset losses from the drop in Canadian Western'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 |
| Canadian Western vs. China Merchants Bank | Canadian Western vs. Nordea Bank Abp | Canadian Western vs. DBS Group Holdings | Canadian Western vs. Tompkins Financial |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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