Correlation Between Telkom Indonesia and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Thyssenkrupp 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 Thyssenkrupp 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 Thyssenkrupp AG ADR, you can compare the effects of market volatilities on Telkom Indonesia and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Thyssenkrupp.
Diversification Opportunities for Telkom Indonesia and Thyssenkrupp
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Thyssenkrupp is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Thyssenkrupp AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thyssenkrupp AG ADR 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thyssenkrupp AG ADR has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Thyssenkrupp
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Thyssenkrupp. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 2.28 times less risky than Thyssenkrupp. The stock trades about -0.12 of its potential returns per unit of risk. The Thyssenkrupp AG ADR is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 349.00 in Thyssenkrupp AG ADR on September 4, 2024 and sell it today you would earn a total of 63.00 from holding Thyssenkrupp AG ADR or generate 18.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Thyssenkrupp AG ADR
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Thyssenkrupp AG ADR |
Telkom Indonesia and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Thyssenkrupp
The main advantage of trading using opposite Telkom Indonesia and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Charter Communications | Telkom Indonesia vs. Vodafone Group PLC |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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