Correlation Between Telkom Indonesia and Millicom International
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Millicom International 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 Millicom International 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 Millicom International Cellular, you can compare the effects of market volatilities on Telkom Indonesia and Millicom International 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 Millicom International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Millicom International.
Diversification Opportunities for Telkom Indonesia and Millicom International
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Telkom and Millicom is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Millicom International Cellula in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millicom International 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 Millicom International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millicom International has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Millicom International go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Millicom International
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Millicom International. In addition to that, Telkom Indonesia is 1.2 times more volatile than Millicom International Cellular. It trades about -0.2 of its total potential returns per unit of risk. Millicom International Cellular is currently generating about -0.12 per unit of volatility. If you would invest 2,758 in Millicom International Cellular on August 24, 2024 and sell it today you would lose (129.00) from holding Millicom International Cellular or give up 4.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Millicom International Cellula
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Millicom International |
Telkom Indonesia and Millicom International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Millicom International
The main advantage of trading using opposite Telkom Indonesia and Millicom International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Millicom International 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 Millicom International will offset losses from the drop in Millicom International's 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 |
| Millicom International vs. KT Corporation | Millicom International vs. Telkom Indonesia Tbk | Millicom International vs. SK Telecom Co | Millicom International vs. PLDT Inc ADR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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