Correlation Between Telkom Indonesia and Shanghai Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Shanghai Pharmaceuticals 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 Shanghai Pharmaceuticals 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 Shanghai Pharmaceuticals Holding, you can compare the effects of market volatilities on Telkom Indonesia and Shanghai Pharmaceuticals 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 Shanghai Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Shanghai Pharmaceuticals.
Diversification Opportunities for Telkom Indonesia and Shanghai Pharmaceuticals
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Telkom and Shanghai is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Shanghai Pharmaceuticals Holdi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Pharmaceuticals 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 Shanghai Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Pharmaceuticals has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Shanghai Pharmaceuticals go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Shanghai Pharmaceuticals
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Shanghai Pharmaceuticals. In addition to that, Telkom Indonesia is 1.88 times more volatile than Shanghai Pharmaceuticals Holding. It trades about -0.18 of its total potential returns per unit of risk. Shanghai Pharmaceuticals Holding is currently generating about 0.15 per unit of volatility. If you would invest 795.00 in Shanghai Pharmaceuticals Holding on November 28, 2024 and sell it today you would earn a total of 34.00 from holding Shanghai Pharmaceuticals Holding or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Shanghai Pharmaceuticals Holdi
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Shanghai Pharmaceuticals |
Telkom Indonesia and Shanghai Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Shanghai Pharmaceuticals
The main advantage of trading using opposite Telkom Indonesia and Shanghai Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Shanghai Pharmaceuticals 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 Shanghai Pharmaceuticals will offset losses from the drop in Shanghai Pharmaceuticals' long position.| Telkom Indonesia vs. Liberty Broadband Srs | Telkom Indonesia vs. Cable One | Telkom Indonesia vs. Liberty Broadband Corp | Telkom Indonesia vs. Liberty Global PLC |
| Shanghai Pharmaceuticals vs. McKesson | Shanghai Pharmaceuticals vs. SINOPHARM GROUP LTD | Shanghai Pharmaceuticals vs. Shanghai Pharmaceuticals Holding | Shanghai Pharmaceuticals vs. Shandong Weigao Group |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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