Correlation Between Telkom Indonesia and Newport Exploration
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Newport Exploration 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 Newport Exploration 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 Newport Exploration, you can compare the effects of market volatilities on Telkom Indonesia and Newport Exploration 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 Newport Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Newport Exploration.
Diversification Opportunities for Telkom Indonesia and Newport Exploration
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telkom and Newport is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Newport Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newport Exploration 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 Newport Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newport Exploration has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Newport Exploration go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Newport Exploration
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to generate 0.45 times more return on investment than Newport Exploration. However, Telkom Indonesia Tbk is 2.23 times less risky than Newport Exploration. It trades about -0.12 of its potential returns per unit of risk. Newport Exploration is currently generating about -0.09 per unit of risk. If you would invest 1,770 in Telkom Indonesia Tbk on September 4, 2024 and sell it today you would lose (95.00) from holding Telkom Indonesia Tbk or give up 5.37% 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. Newport Exploration
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Newport Exploration |
Telkom Indonesia and Newport Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Newport Exploration
The main advantage of trading using opposite Telkom Indonesia and Newport Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Newport Exploration 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 Newport Exploration will offset losses from the drop in Newport Exploration's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Charter Communications | Telkom Indonesia vs. Vodafone Group PLC |
| Newport Exploration vs. Traction Uranium Corp | Newport Exploration vs. New Age Metals | Newport Exploration vs. York Harbour Metals | Newport Exploration vs. Silver Elephant Mining |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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