Correlation Between Telkom Indonesia and PT Bank
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and PT Bank 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 PT Bank 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 PT Bank Central, you can compare the effects of market volatilities on Telkom Indonesia and PT Bank 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 PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and PT Bank.
Diversification Opportunities for Telkom Indonesia and PT Bank
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Telkom and PBCRF is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and PT Bank Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Central 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Central has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and PT Bank go up and down completely randomly.
Pair Corralation between Telkom Indonesia and PT Bank
Assuming the 90 days horizon Telkom Indonesia is expected to generate 1.95 times less return on investment than PT Bank. But when comparing it to its historical volatility, Telkom Indonesia Tbk is 1.16 times less risky than PT Bank. It trades about 0.02 of its potential returns per unit of risk. PT Bank Central is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 57.00 in PT Bank Central on August 29, 2024 and sell it today you would earn a total of 3.00 from holding PT Bank Central or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. PT Bank Central
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| PT Bank Central |
Telkom Indonesia and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and PT Bank
The main advantage of trading using opposite Telkom Indonesia and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, PT Bank 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 PT Bank will offset losses from the drop in PT Bank's long position.| Telkom Indonesia vs. Vodafone Group PLC | Telkom Indonesia vs. KDDI Corp | Telkom Indonesia vs. Amrica Mvil, SAB | Telkom Indonesia vs. Singapore Telecommunications Limited |
| PT Bank vs. Commercial International Bank | PT Bank vs. Caixabank SA ADR | PT Bank vs. Bank Rakyat | PT Bank vs. Lloyds Banking Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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