Correlation Between Telkom Indonesia and EasyJet Plc
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and EasyJet Plc 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 EasyJet Plc 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 easyJet plc, you can compare the effects of market volatilities on Telkom Indonesia and EasyJet Plc 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 EasyJet Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and EasyJet Plc.
Diversification Opportunities for Telkom Indonesia and EasyJet Plc
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and EasyJet is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and easyJet plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on easyJet 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 EasyJet Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of easyJet plc has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and EasyJet Plc go up and down completely randomly.
Pair Corralation between Telkom Indonesia and EasyJet Plc
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to generate 1.4 times more return on investment than EasyJet Plc. However, Telkom Indonesia is 1.4 times more volatile than easyJet plc. It trades about -0.15 of its potential returns per unit of risk. easyJet plc is currently generating about -0.23 per unit of risk. If you would invest 1,843 in Telkom Indonesia Tbk on August 27, 2024 and sell it today you would lose (126.00) from holding Telkom Indonesia Tbk or give up 6.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. easyJet plc
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| easyJet plc |
Telkom Indonesia and EasyJet Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and EasyJet Plc
The main advantage of trading using opposite Telkom Indonesia and EasyJet Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, EasyJet Plc 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 EasyJet Plc will offset losses from the drop in EasyJet Plc's long position.| Telkom Indonesia vs. Liberty Broadband Srs | Telkom Indonesia vs. Ribbon Communications | Telkom Indonesia vs. Liberty Broadband Srs | Telkom Indonesia vs. Shenandoah Telecommunications Co |
| EasyJet Plc vs. Finnair Oyj | EasyJet Plc vs. Norse Atlantic ASA | EasyJet Plc vs. Air New Zealand | EasyJet Plc vs. Air China Limited |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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