Correlation Between Telkom Indonesia and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Dairy Farm 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 Dairy Farm 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 Dairy Farm International, you can compare the effects of market volatilities on Telkom Indonesia and Dairy Farm 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 Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Dairy Farm.
Diversification Opportunities for Telkom Indonesia and Dairy Farm
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Telkom and Dairy is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Dairy Farm go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Dairy Farm
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Dairy Farm. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.14 times less risky than Dairy Farm. The stock trades about -0.04 of its potential returns per unit of risk. The Dairy Farm International is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,086 in Dairy Farm International on September 2, 2024 and sell it today you would earn a total of 169.00 from holding Dairy Farm International or generate 15.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Dairy Farm International
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Dairy Farm International |
Telkom Indonesia and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Dairy Farm
The main advantage of trading using opposite Telkom Indonesia and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Lumen Technologies | Telkom Indonesia vs. Charter Communications |
| Dairy Farm vs. Etablissementen Franz Colruyt | Dairy Farm vs. Seven i Holdings | Dairy Farm vs. Carrefour SA PK | Dairy Farm vs. J Sainsbury PLC |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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