Correlation Between SENECA FOODS-A and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A 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 SENECA FOODS-A and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SENECA FOODS A and Telkom Indonesia Tbk, you can compare the effects of market volatilities on SENECA FOODS-A 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 SENECA FOODS-A with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Telkom Indonesia.
Diversification Opportunities for SENECA FOODS-A and Telkom Indonesia
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SENECA and Telkom is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A 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 SENECA FOODS-A 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 SENECA FOODS A 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 SENECA FOODS-A i.e., SENECA FOODS-A and Telkom Indonesia go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and Telkom Indonesia
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 0.48 times more return on investment than Telkom Indonesia. However, SENECA FOODS A is 2.1 times less risky than Telkom Indonesia. It trades about 0.3 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.02 per unit of risk. If you would invest 5,550 in SENECA FOODS A on September 4, 2024 and sell it today you would earn a total of 1,050 from holding SENECA FOODS A or generate 18.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
SENECA FOODS A vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| SENECA FOODS A |
| Telkom Indonesia Tbk |
SENECA FOODS-A and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and Telkom Indonesia
The main advantage of trading using opposite SENECA FOODS-A and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A 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.| SENECA FOODS-A vs. TOTAL GABON | SENECA FOODS-A vs. Walgreens Boots Alliance | SENECA FOODS-A vs. Peak Resources Limited |
| Telkom Indonesia vs. G III Apparel Group | Telkom Indonesia vs. KIMBALL ELECTRONICS | Telkom Indonesia vs. Methode Electronics | Telkom Indonesia vs. Benchmark Electronics |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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