Correlation Between Telkom Indonesia and Indocement Tunggal
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Indocement Tunggal 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 Indocement Tunggal 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 Indocement Tunggal Prakarsa, you can compare the effects of market volatilities on Telkom Indonesia and Indocement Tunggal 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 Indocement Tunggal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Indocement Tunggal.
Diversification Opportunities for Telkom Indonesia and Indocement Tunggal
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Telkom and Indocement is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Indocement Tunggal Prakarsa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indocement Tunggal 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 Indocement Tunggal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indocement Tunggal has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Indocement Tunggal go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Indocement Tunggal
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Indocement Tunggal. In addition to that, Telkom Indonesia is 1.08 times more volatile than Indocement Tunggal Prakarsa. It trades about -0.03 of its total potential returns per unit of risk. Indocement Tunggal Prakarsa is currently generating about 0.0 per unit of volatility. If you would invest 700,000 in Indocement Tunggal Prakarsa on September 2, 2024 and sell it today you would lose (15,000) from holding Indocement Tunggal Prakarsa or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Indocement Tunggal Prakarsa
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Indocement Tunggal |
Telkom Indonesia and Indocement Tunggal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Indocement Tunggal
The main advantage of trading using opposite Telkom Indonesia and Indocement Tunggal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Indocement Tunggal 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 Indocement Tunggal will offset losses from the drop in Indocement Tunggal'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 |
| Indocement Tunggal vs. Perusahaan Gas Negara | Indocement Tunggal vs. Telkom Indonesia Tbk | Indocement Tunggal vs. Mitra Pinasthika Mustika | Indocement Tunggal vs. Jakarta Int Hotels |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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