Correlation Between Telkom Indonesia and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Yanzhou Coal 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 Yanzhou Coal 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 Yanzhou Coal Mining, you can compare the effects of market volatilities on Telkom Indonesia and Yanzhou Coal 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 Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Yanzhou Coal.
Diversification Opportunities for Telkom Indonesia and Yanzhou Coal
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and Yanzhou is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Yanzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yanzhou Coal Mining 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 Yanzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yanzhou Coal Mining has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Yanzhou Coal go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Yanzhou Coal
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Yanzhou Coal. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 7.2 times less risky than Yanzhou Coal. The stock trades about -0.07 of its potential returns per unit of risk. The Yanzhou Coal Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 178.00 in Yanzhou Coal Mining on August 31, 2024 and sell it today you would lose (43.00) from holding Yanzhou Coal Mining or give up 24.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Yanzhou Coal Mining
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Yanzhou Coal Mining |
Telkom Indonesia and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Yanzhou Coal
The main advantage of trading using opposite Telkom Indonesia and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Yanzhou Coal 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 Yanzhou Coal will offset losses from the drop in Yanzhou Coal's long position.| Telkom Indonesia vs. RLJ Lodging Trust | Telkom Indonesia vs. Aquagold International | Telkom Indonesia vs. Stepstone Group | Telkom Indonesia vs. Morningstar Unconstrained Allocation |
| Yanzhou Coal vs. Indo Tambangraya Megah | Yanzhou Coal vs. Adaro Energy Tbk | Yanzhou Coal vs. Thungela Resources Limited | Yanzhou Coal vs. China Shenhua Energy |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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