Correlation Between Telkom Indonesia and ENB Financial
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and ENB Financial 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 ENB Financial 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 ENB Financial Corp, you can compare the effects of market volatilities on Telkom Indonesia and ENB Financial 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 ENB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and ENB Financial.
Diversification Opportunities for Telkom Indonesia and ENB Financial
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and ENB is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and ENB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENB Financial Corp 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 ENB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENB Financial Corp has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and ENB Financial go up and down completely randomly.
Pair Corralation between Telkom Indonesia and ENB Financial
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the ENB Financial. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 2.32 times less risky than ENB Financial. The stock trades about -0.05 of its potential returns per unit of risk. The ENB Financial Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,677 in ENB Financial Corp on October 21, 2024 and sell it today you would earn a total of 33.00 from holding ENB Financial Corp or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.31% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. ENB Financial Corp
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| ENB Financial Corp |
Telkom Indonesia and ENB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and ENB Financial
The main advantage of trading using opposite Telkom Indonesia and ENB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, ENB Financial 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 ENB Financial will offset losses from the drop in ENB Financial's long position.| Telkom Indonesia vs. Liberty Broadband Srs | Telkom Indonesia vs. Cable One | Telkom Indonesia vs. Liberty Broadband Corp | Telkom Indonesia vs. Liberty Global PLC |
| ENB Financial vs. Potomac Bancshares | ENB Financial vs. Apollo Bancorp | ENB Financial vs. The Farmers Bank | ENB Financial vs. 1ST SUMMIT BANCORP |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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