Correlation Between Telkom Indonesia and Sekar Bumi
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Sekar Bumi 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 Sekar Bumi 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 Sekar Bumi Tbk, you can compare the effects of market volatilities on Telkom Indonesia and Sekar Bumi 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 Sekar Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Sekar Bumi.
Diversification Opportunities for Telkom Indonesia and Sekar Bumi
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Sekar is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Sekar Bumi Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekar Bumi 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 Sekar Bumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekar Bumi Tbk has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Sekar Bumi go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Sekar Bumi
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Sekar Bumi. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 2.94 times less risky than Sekar Bumi. The stock trades about -0.01 of its potential returns per unit of risk. The Sekar Bumi Tbk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 28,200 in Sekar Bumi Tbk on September 3, 2024 and sell it today you would earn a total of 11,200 from holding Sekar Bumi Tbk or generate 39.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Sekar Bumi Tbk
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Sekar Bumi Tbk |
Telkom Indonesia and Sekar Bumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Sekar Bumi
The main advantage of trading using opposite Telkom Indonesia and Sekar Bumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Sekar Bumi 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 Sekar Bumi will offset losses from the drop in Sekar Bumi'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 |
| Sekar Bumi vs. Astra International Tbk | Sekar Bumi vs. Unilever Indonesia Tbk | Sekar Bumi vs. Telkom Indonesia Tbk | Sekar Bumi 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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