Correlation Between Telkom Indonesia and Sinopec Oilfield
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Sinopec Oilfield 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 Sinopec Oilfield 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 Sinopec Oilfield Service, you can compare the effects of market volatilities on Telkom Indonesia and Sinopec Oilfield 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 Sinopec Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Sinopec Oilfield.
Diversification Opportunities for Telkom Indonesia and Sinopec Oilfield
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Sinopec is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Sinopec Oilfield Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Oilfield Service 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 Sinopec Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Oilfield Service has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Sinopec Oilfield go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Sinopec Oilfield
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Sinopec Oilfield. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 4.53 times less risky than Sinopec Oilfield. The stock trades about -0.03 of its potential returns per unit of risk. The Sinopec Oilfield Service is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6.81 in Sinopec Oilfield Service on September 4, 2024 and sell it today you would lose (0.27) from holding Sinopec Oilfield Service or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Sinopec Oilfield Service
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Sinopec Oilfield Service |
Telkom Indonesia and Sinopec Oilfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Sinopec Oilfield
The main advantage of trading using opposite Telkom Indonesia and Sinopec Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Sinopec Oilfield 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 Sinopec Oilfield will offset losses from the drop in Sinopec Oilfield's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Charter Communications | Telkom Indonesia vs. Vodafone Group PLC |
| Sinopec Oilfield vs. Apple Inc | Sinopec Oilfield vs. Microsoft | Sinopec Oilfield vs. Amazon Inc | Sinopec Oilfield vs. Alphabet Inc Class C |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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