Correlation Between Telkom Indonesia and Consolidated Communications
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Consolidated Communications 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 Consolidated Communications 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 Consolidated Communications, you can compare the effects of market volatilities on Telkom Indonesia and Consolidated Communications 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 Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Consolidated Communications.
Diversification Opportunities for Telkom Indonesia and Consolidated Communications
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Consolidated is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Consolidated Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Consolidated Communications go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Consolidated Communications
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Consolidated Communications. In addition to that, Telkom Indonesia is 6.18 times more volatile than Consolidated Communications. It trades about -0.17 of its total potential returns per unit of risk. Consolidated Communications is currently generating about 0.12 per unit of volatility. If you would invest 463.00 in Consolidated Communications on August 30, 2024 and sell it today you would earn a total of 4.00 from holding Consolidated Communications or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Consolidated Communications
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Consolidated Communications |
Telkom Indonesia and Consolidated Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Consolidated Communications
The main advantage of trading using opposite Telkom Indonesia and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Consolidated Communications 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Lumen Technologies | Telkom Indonesia vs. Verizon Communications |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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