Correlation Between Telkom Indonesia and Steel Pipe
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Steel Pipe 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 Steel Pipe 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 Steel Pipe Industry, you can compare the effects of market volatilities on Telkom Indonesia and Steel Pipe 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 Steel Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Steel Pipe.
Diversification Opportunities for Telkom Indonesia and Steel Pipe
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telkom and Steel is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Steel Pipe Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Pipe Industry 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 Steel Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Pipe Industry has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Steel Pipe go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Steel Pipe
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Steel Pipe. In addition to that, Telkom Indonesia is 1.56 times more volatile than Steel Pipe Industry. It trades about -0.03 of its total potential returns per unit of risk. Steel Pipe Industry is currently generating about 0.04 per unit of volatility. If you would invest 26,781 in Steel Pipe Industry on September 2, 2024 and sell it today you would earn a total of 1,619 from holding Steel Pipe Industry or generate 6.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Steel Pipe Industry
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Steel Pipe Industry |
Telkom Indonesia and Steel Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Steel Pipe
The main advantage of trading using opposite Telkom Indonesia and Steel Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Steel Pipe 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 Steel Pipe will offset losses from the drop in Steel Pipe'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 |
| Steel Pipe vs. Perusahaan Gas Negara | Steel Pipe vs. Telkom Indonesia Tbk | Steel Pipe vs. Mitra Pinasthika Mustika | Steel Pipe 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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