Correlation Between Telkom Indonesia and Bisi International
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Bisi 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 Bisi 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 Bisi International Tbk, you can compare the effects of market volatilities on Telkom Indonesia and Bisi 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 Bisi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Bisi International.
Diversification Opportunities for Telkom Indonesia and Bisi International
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Telkom and Bisi is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Bisi International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisi International Tbk 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 Bisi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisi International Tbk has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Bisi International go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Bisi International
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 0.79 times more return on investment than Bisi International. However, Telkom Indonesia Tbk is 1.27 times less risky than Bisi International. It trades about -0.07 of its potential returns per unit of risk. Bisi International Tbk is currently generating about -0.24 per unit of risk. If you would invest 289,000 in Telkom Indonesia Tbk on September 3, 2024 and sell it today you would lose (18,000) from holding Telkom Indonesia Tbk or give up 6.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Bisi International Tbk
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Bisi International Tbk |
Telkom Indonesia and Bisi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Bisi International
The main advantage of trading using opposite Telkom Indonesia and Bisi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Bisi 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 Bisi International will offset losses from the drop in Bisi International'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 |
| Bisi International vs. Astra International Tbk | Bisi International vs. Unilever Indonesia Tbk | Bisi International vs. Telkom Indonesia Tbk | Bisi International vs. Bank Mandiri Persero |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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