Correlation Between Telkom Indonesia and Kalbe Farma
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Kalbe Farma 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 Kalbe Farma 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 Kalbe Farma Tbk, you can compare the effects of market volatilities on Telkom Indonesia and Kalbe Farma 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 Kalbe Farma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Kalbe Farma.
Diversification Opportunities for Telkom Indonesia and Kalbe Farma
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Telkom and Kalbe is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Kalbe Farma Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalbe Farma 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 Kalbe Farma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalbe Farma Tbk has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Kalbe Farma go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Kalbe Farma
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 1.58 times more return on investment than Kalbe Farma. However, Telkom Indonesia is 1.58 times more volatile than Kalbe Farma Tbk. It trades about -0.11 of its potential returns per unit of risk. Kalbe Farma Tbk is currently generating about -0.29 per unit of risk. If you would invest 292,000 in Telkom Indonesia Tbk on August 27, 2024 and sell it today you would lose (17,000) from holding Telkom Indonesia Tbk or give up 5.82% 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. Kalbe Farma Tbk
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Kalbe Farma Tbk |
Telkom Indonesia and Kalbe Farma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Kalbe Farma
The main advantage of trading using opposite Telkom Indonesia and Kalbe Farma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Kalbe Farma 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 Kalbe Farma will offset losses from the drop in Kalbe Farma's long position.| Telkom Indonesia vs. Mnc Land Tbk | Telkom Indonesia vs. MNC Vision Networks | Telkom Indonesia vs. Medikaloka Hermina PT |
| Kalbe Farma vs. PT Indofood Sukses | Kalbe Farma vs. Unilever Indonesia Tbk | Kalbe Farma vs. Semen Indonesia Persero | Kalbe Farma vs. United Tractors Tbk |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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