Correlation Between Telkom Indonesia and Tigaraksa Satria
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Tigaraksa Satria 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 Tigaraksa Satria 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 Tigaraksa Satria Tbk, you can compare the effects of market volatilities on Telkom Indonesia and Tigaraksa Satria 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 Tigaraksa Satria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Tigaraksa Satria.
Diversification Opportunities for Telkom Indonesia and Tigaraksa Satria
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Telkom and Tigaraksa is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Tigaraksa Satria Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigaraksa Satria 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 Tigaraksa Satria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigaraksa Satria Tbk has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Tigaraksa Satria go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Tigaraksa Satria
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Tigaraksa Satria. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.1 times less risky than Tigaraksa Satria. The stock trades about -0.06 of its potential returns per unit of risk. The Tigaraksa Satria Tbk is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 635,000 in Tigaraksa Satria Tbk on September 3, 2024 and sell it today you would lose (20,000) from holding Tigaraksa Satria Tbk or give up 3.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Tigaraksa Satria Tbk
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Tigaraksa Satria Tbk |
Telkom Indonesia and Tigaraksa Satria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Tigaraksa Satria
The main advantage of trading using opposite Telkom Indonesia and Tigaraksa Satria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Tigaraksa Satria 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 Tigaraksa Satria will offset losses from the drop in Tigaraksa Satria'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 |
| Tigaraksa Satria vs. Astra International Tbk | Tigaraksa Satria vs. Unilever Indonesia Tbk | Tigaraksa Satria vs. Telkom Indonesia Tbk | Tigaraksa Satria 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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