Correlation Between Telkom Indonesia and Frontera Energy
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Frontera Energy 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 Frontera Energy 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 Frontera Energy Corp, you can compare the effects of market volatilities on Telkom Indonesia and Frontera Energy 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 Frontera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Frontera Energy.
Diversification Opportunities for Telkom Indonesia and Frontera Energy
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Telkom and Frontera is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Frontera Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontera Energy 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 Frontera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontera Energy Corp has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Frontera Energy go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Frontera Energy
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to generate 0.86 times more return on investment than Frontera Energy. However, Telkom Indonesia Tbk is 1.16 times less risky than Frontera Energy. It trades about -0.03 of its potential returns per unit of risk. Frontera Energy Corp is currently generating about -0.04 per unit of risk. If you would invest 1,815 in Telkom Indonesia Tbk on November 28, 2024 and sell it today you would lose (219.00) from holding Telkom Indonesia Tbk or give up 12.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Frontera Energy Corp
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Frontera Energy Corp |
Telkom Indonesia and Frontera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Frontera Energy
The main advantage of trading using opposite Telkom Indonesia and Frontera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Frontera Energy 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 Frontera Energy will offset losses from the drop in Frontera Energy'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 |
| Frontera Energy vs. CGX Energy | Frontera Energy vs. Athabasca Oil Corp | Frontera Energy vs. Africa Oil Corp | Frontera Energy vs. MEG Energy Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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