Correlation Between Telkom Indonesia and Rolls Royce
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Rolls Royce 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 Rolls Royce 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 Rolls Royce Holdings, you can compare the effects of market volatilities on Telkom Indonesia and Rolls Royce 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 Rolls Royce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Rolls Royce.
Diversification Opportunities for Telkom Indonesia and Rolls Royce
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Rolls is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Rolls Royce Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rolls Royce 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 Rolls Royce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rolls Royce Holdings has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Rolls Royce go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Rolls Royce
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to generate 1.29 times more return on investment than Rolls Royce. However, Telkom Indonesia is 1.29 times more volatile than Rolls Royce Holdings. It trades about -0.06 of its potential returns per unit of risk. Rolls Royce Holdings is currently generating about -0.08 per unit of risk. If you would invest 1,759 in Telkom Indonesia Tbk on September 1, 2024 and sell it today you would lose (51.00) from holding Telkom Indonesia Tbk or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Rolls Royce Holdings
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Rolls Royce Holdings |
Telkom Indonesia and Rolls Royce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Rolls Royce
The main advantage of trading using opposite Telkom Indonesia and Rolls Royce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Rolls Royce 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 Rolls Royce will offset losses from the drop in Rolls Royce's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Lumen Technologies | Telkom Indonesia vs. Charter Communications |
| Rolls Royce vs. Eve Holding | Rolls Royce vs. Rolls Royce Holdings PLC | Rolls Royce vs. Sembcorp Marine | Rolls Royce vs. HEICO |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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