Correlation Between Telkom Indonesia and Telia Company
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Telia Company 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 Telia Company 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 Telia Company AB, you can compare the effects of market volatilities on Telkom Indonesia and Telia Company 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 Telia Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Telia Company.
Diversification Opportunities for Telkom Indonesia and Telia Company
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Telkom and Telia is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company 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 Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Telia Company go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Telia Company
Assuming the 90 days horizon Telkom Indonesia is expected to generate 1.22 times less return on investment than Telia Company. In addition to that, Telkom Indonesia is 1.21 times more volatile than Telia Company AB. It trades about 0.02 of its total potential returns per unit of risk. Telia Company AB is currently generating about 0.03 per unit of volatility. If you would invest 275.00 in Telia Company AB on September 3, 2024 and sell it today you would earn a total of 35.00 from holding Telia Company AB or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.53% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Telia Company AB
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Telia Company |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Telkom Indonesia and Telia Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Telia Company
The main advantage of trading using opposite Telkom Indonesia and Telia Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Telia Company 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 Telia Company will offset losses from the drop in Telia Company'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 |
| Telia Company vs. Mills Music Trust | Telia Company vs. EvoAir Holdings | Telia Company vs. Molson Coors Brewing | Telia Company vs. The Coca Cola |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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