Correlation Between Vodafone Group and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Vodafone Group and Telkom Indonesia 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 Vodafone Group and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vodafone Group PLC and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Vodafone Group and Telkom Indonesia 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 Vodafone Group with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and Telkom Indonesia.
Diversification Opportunities for Vodafone Group and Telkom Indonesia
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vodafone and Telkom is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk and Vodafone Group 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 Vodafone Group PLC are associated (or correlated) with Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of Vodafone Group i.e., Vodafone Group and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Vodafone Group and Telkom Indonesia
Considering the 90-day investment horizon Vodafone Group PLC is expected to generate 1.02 times more return on investment than Telkom Indonesia. However, Vodafone Group is 1.02 times more volatile than Telkom Indonesia Tbk. It trades about 0.04 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.09 per unit of risk. If you would invest 796.00 in Vodafone Group PLC on August 28, 2024 and sell it today you would earn a total of 95.00 from holding Vodafone Group PLC or generate 11.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vodafone Group PLC vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| Vodafone Group PLC |
| Telkom Indonesia Tbk |
Vodafone Group and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodafone Group and Telkom Indonesia
The main advantage of trading using opposite Vodafone Group and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone Group position performs unexpectedly, Telkom Indonesia 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 Telkom Indonesia will offset losses from the drop in Telkom Indonesia's long position.| Vodafone Group vs. Liberty Broadband Corp | Vodafone Group vs. Ooma Inc | Vodafone Group vs. IDT Corporation | Vodafone Group vs. Radcom |
| Telkom Indonesia vs. Liberty Broadband Srs | Telkom Indonesia vs. Ribbon Communications | Telkom Indonesia vs. Liberty Broadband Srs | Telkom Indonesia vs. Shenandoah Telecommunications Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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