Correlation Between Telkom Indonesia and China TowerLimited
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and China TowerLimited 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 TowerLimited 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 Tower, you can compare the effects of market volatilities on Telkom Indonesia and China TowerLimited 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 TowerLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and China TowerLimited.
Diversification Opportunities for Telkom Indonesia and China TowerLimited
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and China is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and China Tower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China TowerLimited 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 TowerLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China TowerLimited has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and China TowerLimited go up and down completely randomly.
Pair Corralation between Telkom Indonesia and China TowerLimited
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the China TowerLimited. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 12.61 times less risky than China TowerLimited. The stock trades about -0.07 of its potential returns per unit of risk. The China Tower is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 11.00 in China Tower on September 2, 2024 and sell it today you would earn a total of 1.00 from holding China Tower or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 71.24% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. China Tower
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| China TowerLimited |
Telkom Indonesia and China TowerLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and China TowerLimited
The main advantage of trading using opposite Telkom Indonesia and China TowerLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, China TowerLimited 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 TowerLimited will offset losses from the drop in China TowerLimited's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Lumen Technologies | Telkom Indonesia vs. Charter Communications |
| China TowerLimited vs. Verizon Communications | China TowerLimited vs. ATT Inc | China TowerLimited vs. Comcast Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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