Correlation Between Telkom Indonesia and Federal National
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Federal National 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 Federal National 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 Federal National Mortgage, you can compare the effects of market volatilities on Telkom Indonesia and Federal National 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 Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Federal National.
Diversification Opportunities for Telkom Indonesia and Federal National
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Telkom and Federal is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage 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 Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Federal National go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Federal National
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Federal National. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 11.38 times less risky than Federal National. The stock trades about -0.12 of its potential returns per unit of risk. The Federal National Mortgage is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,300,000 in Federal National Mortgage on September 4, 2024 and sell it today you would earn a total of 2,000,000 from holding Federal National Mortgage or generate 153.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Federal National Mortgage
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Federal National Mortgage |
Telkom Indonesia and Federal National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Federal National
The main advantage of trading using opposite Telkom Indonesia and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Federal National 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 Federal National will offset losses from the drop in Federal National's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Charter Communications | Telkom Indonesia vs. Vodafone Group PLC |
| Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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