Correlation Between Telkom Indonesia and Plum Acquisition
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Plum Acquisition 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 Plum Acquisition 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 Plum Acquisition Corp, you can compare the effects of market volatilities on Telkom Indonesia and Plum Acquisition 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 Plum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Plum Acquisition.
Diversification Opportunities for Telkom Indonesia and Plum Acquisition
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Telkom and Plum is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition Corp 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 Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Plum Acquisition go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Plum Acquisition
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Plum Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 96.36 times less risky than Plum Acquisition. The stock trades about -0.07 of its potential returns per unit of risk. The Plum Acquisition Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Plum Acquisition Corp on September 2, 2024 and sell it today you would earn a total of 7.00 from holding Plum Acquisition Corp or generate 38.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 61.56% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Plum Acquisition Corp
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Plum Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
Telkom Indonesia and Plum Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Plum Acquisition
The main advantage of trading using opposite Telkom Indonesia and Plum Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Plum Acquisition 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 Plum Acquisition will offset losses from the drop in Plum Acquisition's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Lumen Technologies | Telkom Indonesia vs. Charter Communications |
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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