Correlation Between Telkom Indonesia and PacWest Bancorp
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and PacWest Bancorp 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 PacWest Bancorp 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 PacWest Bancorp, you can compare the effects of market volatilities on Telkom Indonesia and PacWest Bancorp 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 PacWest Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and PacWest Bancorp.
Diversification Opportunities for Telkom Indonesia and PacWest Bancorp
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and PacWest is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and PacWest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacWest Bancorp 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 PacWest Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacWest Bancorp has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and PacWest Bancorp go up and down completely randomly.
Pair Corralation between Telkom Indonesia and PacWest Bancorp
Assuming the 90 days horizon Telkom Indonesia Tbk is expected to under-perform the PacWest Bancorp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.89 times less risky than PacWest Bancorp. The pink sheet trades about -0.01 of its potential returns per unit of risk. The PacWest Bancorp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,105 in PacWest Bancorp on August 29, 2024 and sell it today you would earn a total of 365.00 from holding PacWest Bancorp or generate 33.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 14.23% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. PacWest Bancorp
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| PacWest Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Telkom Indonesia and PacWest Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and PacWest Bancorp
The main advantage of trading using opposite Telkom Indonesia and PacWest Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, PacWest Bancorp 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 PacWest Bancorp will offset losses from the drop in PacWest Bancorp's long position.| Telkom Indonesia vs. KDDI Corp | Telkom Indonesia vs. Amrica Mvil, SAB | Telkom Indonesia vs. ATT Inc | Telkom Indonesia vs. FingerMotion |
| PacWest Bancorp vs. Western Alliance Bancorporation | PacWest Bancorp vs. Midland States Bancorp | PacWest Bancorp vs. Wintrust Financial Corp | PacWest Bancorp vs. Bank Ozk Preferred |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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