Correlation Between Telkom Indonesia and Flight Centre
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Flight Centre 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 Flight Centre 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 Flight Centre Travel, you can compare the effects of market volatilities on Telkom Indonesia and Flight Centre 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 Flight Centre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Flight Centre.
Diversification Opportunities for Telkom Indonesia and Flight Centre
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and Flight is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Flight Centre Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flight Centre Travel 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 Flight Centre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flight Centre Travel has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Flight Centre go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Flight Centre
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Flight Centre. In addition to that, Telkom Indonesia is 10.49 times more volatile than Flight Centre Travel. It trades about -0.02 of its total potential returns per unit of risk. Flight Centre Travel is currently generating about 0.12 per unit of volatility. If you would invest 1,400 in Flight Centre Travel on September 1, 2024 and sell it today you would earn a total of 20.00 from holding Flight Centre Travel or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 58.73% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Flight Centre Travel
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Flight Centre Travel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Telkom Indonesia and Flight Centre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Flight Centre
The main advantage of trading using opposite Telkom Indonesia and Flight Centre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Flight Centre 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 Flight Centre will offset losses from the drop in Flight Centre's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Lumen Technologies | Telkom Indonesia vs. Charter Communications |
| Flight Centre vs. Norwegian Cruise Line | Flight Centre vs. Carnival | Flight Centre vs. Airbnb Inc | Flight Centre vs. Expedia Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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