Correlation Between Telkom Indonesia and Bank Central
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Bank Central 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 Bank Central 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 Bank Central Asia, you can compare the effects of market volatilities on Telkom Indonesia and Bank Central 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 Bank Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Bank Central.
Diversification Opportunities for Telkom Indonesia and Bank Central
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telkom and Bank is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia 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 Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Bank Central go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Bank Central
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Bank Central. In addition to that, Telkom Indonesia is 1.01 times more volatile than Bank Central Asia. It trades about -0.09 of its total potential returns per unit of risk. Bank Central Asia is currently generating about 0.02 per unit of volatility. If you would invest 1,519 in Bank Central Asia on September 1, 2024 and sell it today you would earn a total of 42.00 from holding Bank Central Asia or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Bank Central Asia
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Bank Central Asia |
Telkom Indonesia and Bank Central Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Bank Central
The main advantage of trading using opposite Telkom Indonesia and Bank Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Bank Central 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 Bank Central will offset losses from the drop in Bank Central's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Lumen Technologies | Telkom Indonesia vs. Charter Communications |
| Bank Central vs. Piraeus Bank SA | Bank Central vs. Turkiye Garanti Bankasi | Bank Central vs. Delhi Bank Corp | Bank Central vs. Uwharrie Capital Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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