Correlation Between Telkom Indonesia and Inocycle Technology
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Inocycle Technology 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 Inocycle Technology 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 Inocycle Technology Tbk, you can compare the effects of market volatilities on Telkom Indonesia and Inocycle Technology 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 Inocycle Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Inocycle Technology.
Diversification Opportunities for Telkom Indonesia and Inocycle Technology
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and Inocycle is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Inocycle Technology Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inocycle Technology 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 Inocycle Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inocycle Technology Tbk has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Inocycle Technology go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Inocycle Technology
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 1.06 times more return on investment than Inocycle Technology. However, Telkom Indonesia is 1.06 times more volatile than Inocycle Technology Tbk. It trades about -0.12 of its potential returns per unit of risk. Inocycle Technology Tbk is currently generating about -0.23 per unit of risk. If you would invest 290,000 in Telkom Indonesia Tbk on August 31, 2024 and sell it today you would lose (18,000) from holding Telkom Indonesia Tbk or give up 6.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Inocycle Technology Tbk
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Inocycle Technology Tbk |
Telkom Indonesia and Inocycle Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Inocycle Technology
The main advantage of trading using opposite Telkom Indonesia and Inocycle Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Inocycle Technology 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 Inocycle Technology will offset losses from the drop in Inocycle Technology's long position.| Telkom Indonesia vs. Indosat Tbk | Telkom Indonesia vs. XL Axiata Tbk | Telkom Indonesia vs. Energi Mega Persada | Telkom Indonesia vs. Bakrie Brothers Tbk |
| Inocycle Technology vs. MNC Vision Networks | Inocycle Technology vs. Hartadinata Abadi Tbk | Inocycle Technology vs. Kencana Energi Lestari | Inocycle Technology vs. Bali Bintang Sejahtera |
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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