Correlation Between Telkom Indonesia and Financial Strategies
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Financial Strategies 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 Financial Strategies 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 Financial Strategies Acquisition, you can compare the effects of market volatilities on Telkom Indonesia and Financial Strategies 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 Financial Strategies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Financial Strategies.
Diversification Opportunities for Telkom Indonesia and Financial Strategies
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and Financial is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Financial Strategies Acquisiti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Strategies 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 Financial Strategies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Strategies has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Financial Strategies go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Financial Strategies
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Financial Strategies. In addition to that, Telkom Indonesia is 5.03 times more volatile than Financial Strategies Acquisition. It trades about -0.03 of its total potential returns per unit of risk. Financial Strategies Acquisition is currently generating about 0.18 per unit of volatility. If you would invest 1,014 in Financial Strategies Acquisition on September 3, 2024 and sell it today you would earn a total of 76.00 from holding Financial Strategies Acquisition or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 30.71% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Financial Strategies Acquisiti
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Financial Strategies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Telkom Indonesia and Financial Strategies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Financial Strategies
The main advantage of trading using opposite Telkom Indonesia and Financial Strategies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Financial Strategies 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 Financial Strategies will offset losses from the drop in Financial Strategies' long position.| Telkom Indonesia vs. Highway Holdings Limited | Telkom Indonesia vs. QCR Holdings | Telkom Indonesia vs. Partner Communications | Telkom Indonesia vs. Acumen Pharmaceuticals |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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