Correlation Between Telkom Indonesia and Itau CorpBanca
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Itau CorpBanca 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 Itau CorpBanca 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 Itau CorpBanca ADR, you can compare the effects of market volatilities on Telkom Indonesia and Itau CorpBanca 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 Itau CorpBanca. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Itau CorpBanca.
Diversification Opportunities for Telkom Indonesia and Itau CorpBanca
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Telkom and Itau is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Itau CorpBanca ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itau CorpBanca ADR 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 Itau CorpBanca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itau CorpBanca ADR has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Itau CorpBanca go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Itau CorpBanca
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Itau CorpBanca. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.76 times less risky than Itau CorpBanca. The stock trades about -0.03 of its potential returns per unit of risk. The Itau CorpBanca ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 311.00 in Itau CorpBanca ADR on August 30, 2024 and sell it today you would earn a total of 31.00 from holding Itau CorpBanca ADR or generate 9.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 19.56% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Itau CorpBanca ADR
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Itau CorpBanca ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Telkom Indonesia and Itau CorpBanca Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Itau CorpBanca
The main advantage of trading using opposite Telkom Indonesia and Itau CorpBanca positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Itau CorpBanca 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 Itau CorpBanca will offset losses from the drop in Itau CorpBanca's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Charter Communications | Telkom Indonesia vs. Vodafone Group PLC |
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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 Stocks Directory module to find actively traded stocks across global markets.
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