Correlation Between Telkom Indonesia and KDDI Corp
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and KDDI Corp 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 KDDI Corp 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 KDDI Corp, you can compare the effects of market volatilities on Telkom Indonesia and KDDI Corp 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 KDDI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and KDDI Corp.
Diversification Opportunities for Telkom Indonesia and KDDI Corp
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and KDDI is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and KDDI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDDI Corp 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 KDDI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDDI Corp has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and KDDI Corp go up and down completely randomly.
Pair Corralation between Telkom Indonesia and KDDI Corp
Assuming the 90 days horizon Telkom Indonesia Tbk is expected to generate 2.2 times more return on investment than KDDI Corp. However, Telkom Indonesia is 2.2 times more volatile than KDDI Corp. It trades about 0.07 of its potential returns per unit of risk. KDDI Corp is currently generating about -0.08 per unit of risk. If you would invest 18.00 in Telkom Indonesia Tbk on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Telkom Indonesia Tbk or generate 5.56% 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. KDDI Corp
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| KDDI Corp |
Telkom Indonesia and KDDI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and KDDI Corp
The main advantage of trading using opposite Telkom Indonesia and KDDI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, KDDI Corp 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 KDDI Corp will offset losses from the drop in KDDI Corp's long position.| Telkom Indonesia vs. Verizon Communications | Telkom Indonesia vs. ATT Inc | Telkom Indonesia vs. Comcast Corp |
| KDDI Corp vs. Telefnica SA | KDDI Corp vs. Turk Telekomunikasyon AS | KDDI Corp vs. Orange SA | KDDI Corp vs. Nippon Telegraph Telephone |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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