Correlation Between Telkom Indonesia and Liberty Global
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Liberty Global 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 Liberty Global 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 Liberty Global PLC, you can compare the effects of market volatilities on Telkom Indonesia and Liberty Global 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 Liberty Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Liberty Global.
Diversification Opportunities for Telkom Indonesia and Liberty Global
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telkom and Liberty is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Liberty Global PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Global PLC 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 Liberty Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Global PLC has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Liberty Global go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Liberty Global
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to generate 0.26 times more return on investment than Liberty Global. However, Telkom Indonesia Tbk is 3.8 times less risky than Liberty Global. It trades about -0.11 of its potential returns per unit of risk. Liberty Global PLC is currently generating about -0.05 per unit of risk. If you would invest 1,918 in Telkom Indonesia Tbk on August 23, 2024 and sell it today you would lose (223.00) from holding Telkom Indonesia Tbk or give up 11.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Liberty Global PLC
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Liberty Global PLC |
Telkom Indonesia and Liberty Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Liberty Global
The main advantage of trading using opposite Telkom Indonesia and Liberty Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Liberty Global 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 Liberty Global will offset losses from the drop in Liberty Global's long position.| Telkom Indonesia vs. Small Cap Core | Telkom Indonesia vs. FitLife Brands, Common | Telkom Indonesia vs. Mutual Of America | Telkom Indonesia vs. Gfl Environmental Holdings |
| Liberty Global vs. Small Cap Core | Liberty Global vs. FitLife Brands, Common | Liberty Global vs. Mutual Of America | Liberty Global vs. Gfl Environmental Holdings |
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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