Correlation Between Telkom Indonesia and Cashmere Valley
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Cashmere Valley 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 Cashmere Valley 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 Cashmere Valley Bank, you can compare the effects of market volatilities on Telkom Indonesia and Cashmere Valley 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 Cashmere Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Cashmere Valley.
Diversification Opportunities for Telkom Indonesia and Cashmere Valley
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and Cashmere is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Cashmere Valley Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cashmere Valley 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 Cashmere Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cashmere Valley Bank has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Cashmere Valley go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Cashmere Valley
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Cashmere Valley. In addition to that, Telkom Indonesia is 1.13 times more volatile than Cashmere Valley Bank. It trades about -0.08 of its total potential returns per unit of risk. Cashmere Valley Bank is currently generating about 0.09 per unit of volatility. If you would invest 4,469 in Cashmere Valley Bank on September 2, 2024 and sell it today you would earn a total of 1,431 from holding Cashmere Valley Bank or generate 32.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.16% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Cashmere Valley Bank
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Cashmere Valley Bank |
Telkom Indonesia and Cashmere Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Cashmere Valley
The main advantage of trading using opposite Telkom Indonesia and Cashmere Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Cashmere Valley 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 Cashmere Valley will offset losses from the drop in Cashmere Valley's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Lumen Technologies | Telkom Indonesia vs. Charter Communications |
| Cashmere Valley vs. Santa Cruz County | Cashmere Valley vs. Montfort Capital Corp | Cashmere Valley vs. Mullen Group | Cashmere Valley vs. Cartier Resources |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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