Correlation Between Telkom Indonesia and Vinci SA
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Vinci SA 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 Vinci SA 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 Vinci SA ADR, you can compare the effects of market volatilities on Telkom Indonesia and Vinci SA 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 Vinci SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Vinci SA.
Diversification Opportunities for Telkom Indonesia and Vinci SA
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Vinci is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Vinci SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci SA ADR 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 Vinci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci SA ADR has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Vinci SA go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Vinci SA
Assuming the 90 days horizon Telkom Indonesia Tbk is expected to under-perform the Vinci SA. In addition to that, Telkom Indonesia is 2.72 times more volatile than Vinci SA ADR. It trades about -0.03 of its total potential returns per unit of risk. Vinci SA ADR is currently generating about -0.05 per unit of volatility. If you would invest 3,053 in Vinci SA ADR on September 1, 2024 and sell it today you would lose (423.00) from holding Vinci SA ADR or give up 13.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.17% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Vinci SA ADR
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Vinci SA ADR |
Telkom Indonesia and Vinci SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Vinci SA
The main advantage of trading using opposite Telkom Indonesia and Vinci SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Vinci SA 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 Vinci SA will offset losses from the drop in Vinci SA's long position.| Telkom Indonesia vs. Verizon Communications | Telkom Indonesia vs. ATT Inc | Telkom Indonesia vs. Comcast Corp |
| Vinci SA vs. Orion Group Holdings | Vinci SA vs. Agrify Corp | Vinci SA vs. Matrix Service Co | Vinci SA vs. MYR 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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