Correlation Between Telkom Indonesia and Compass Group
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Compass 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 Compass 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 Compass Group PLC, you can compare the effects of market volatilities on Telkom Indonesia and Compass 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 Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Compass Group.
Diversification Opportunities for Telkom Indonesia and Compass Group
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and Compass is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Compass Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Group PLC 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 Compass Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Group PLC has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Compass Group go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Compass Group
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Compass Group. In addition to that, Telkom Indonesia is 2.27 times more volatile than Compass Group PLC. It trades about -0.16 of its total potential returns per unit of risk. Compass Group PLC is currently generating about 0.23 per unit of volatility. If you would invest 3,320 in Compass Group PLC on August 31, 2024 and sell it today you would earn a total of 152.00 from holding Compass Group PLC or generate 4.58% 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. Compass Group PLC
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Compass Group PLC |
Telkom Indonesia and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Compass Group
The main advantage of trading using opposite Telkom Indonesia and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Compass 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 Compass Group will offset losses from the drop in Compass Group's long position.| Telkom Indonesia vs. RLJ Lodging Trust | Telkom Indonesia vs. Aquagold International | Telkom Indonesia vs. Stepstone Group | Telkom Indonesia vs. Morningstar Unconstrained Allocation |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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