Correlation Between Telkom Indonesia and Argha Karya
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Argha Karya 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 Argha Karya 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 Argha Karya Prima, you can compare the effects of market volatilities on Telkom Indonesia and Argha Karya 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 Argha Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Argha Karya.
Diversification Opportunities for Telkom Indonesia and Argha Karya
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Telkom and Argha is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Argha Karya Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argha Karya Prima 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 Argha Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argha Karya Prima has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Argha Karya go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Argha Karya
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Argha Karya. In addition to that, Telkom Indonesia is 1.44 times more volatile than Argha Karya Prima. It trades about -0.01 of its total potential returns per unit of risk. Argha Karya Prima is currently generating about 0.14 per unit of volatility. If you would invest 58,500 in Argha Karya Prima on November 27, 2024 and sell it today you would earn a total of 3,000 from holding Argha Karya Prima or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Argha Karya Prima
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Argha Karya Prima |
Telkom Indonesia and Argha Karya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Argha Karya
The main advantage of trading using opposite Telkom Indonesia and Argha Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Argha Karya 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 Argha Karya will offset losses from the drop in Argha Karya's long position.| Telkom Indonesia vs. Astra International Tbk | Telkom Indonesia vs. Bank Rakyat Indonesia | Telkom Indonesia vs. Bank Mandiri Persero | Telkom Indonesia vs. Bank Central Asia |
| Argha Karya vs. Asiaplast Industries Tbk | Argha Karya vs. Alumindo Light Metal | Argha Karya vs. Berlina Tbk | Argha Karya vs. Anugerah Kagum Karya |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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