Correlation Between Telkom Indonesia and NightFood Holdings
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and NightFood Holdings 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 NightFood Holdings 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 NightFood Holdings, you can compare the effects of market volatilities on Telkom Indonesia and NightFood Holdings 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 NightFood Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and NightFood Holdings.
Diversification Opportunities for Telkom Indonesia and NightFood Holdings
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telkom and NightFood is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and NightFood Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NightFood Holdings 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 NightFood Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NightFood Holdings has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and NightFood Holdings go up and down completely randomly.
Pair Corralation between Telkom Indonesia and NightFood Holdings
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to generate 0.34 times more return on investment than NightFood Holdings. However, Telkom Indonesia Tbk is 2.96 times less risky than NightFood Holdings. It trades about -0.04 of its potential returns per unit of risk. NightFood Holdings is currently generating about -0.07 per unit of risk. If you would invest 1,749 in Telkom Indonesia Tbk on September 2, 2024 and sell it today you would lose (41.00) from holding Telkom Indonesia Tbk or give up 2.34% 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. NightFood Holdings
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| NightFood Holdings |
Telkom Indonesia and NightFood Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and NightFood Holdings
The main advantage of trading using opposite Telkom Indonesia and NightFood Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, NightFood Holdings 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 NightFood Holdings will offset losses from the drop in NightFood Holdings' long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Lumen Technologies | Telkom Indonesia vs. Charter Communications |
| NightFood Holdings vs. The A2 Milk | NightFood Holdings vs. Artisan Consumer Goods | NightFood Holdings vs. General Mills |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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