Correlation Between INSURANCE AUST and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST 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 INSURANCE AUST and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSURANCE AUST GRP and Telkom Indonesia Tbk, you can compare the effects of market volatilities on INSURANCE AUST 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 INSURANCE AUST with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and Telkom Indonesia.
Diversification Opportunities for INSURANCE AUST and Telkom Indonesia
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between INSURANCE and Telkom is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP 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 INSURANCE AUST 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 INSURANCE AUST GRP 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 INSURANCE AUST i.e., INSURANCE AUST and Telkom Indonesia go up and down completely randomly.
Pair Corralation between INSURANCE AUST and Telkom Indonesia
Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to under-perform the Telkom Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, INSURANCE AUST GRP is 4.13 times less risky than Telkom Indonesia. The stock trades about -0.08 of its potential returns per unit of risk. The Telkom Indonesia Tbk is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Telkom Indonesia Tbk on December 25, 2024 and sell it today you would lose (4.00) from holding Telkom Indonesia Tbk or give up 23.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.36% |
Values | Daily Returns |
INSURANCE AUST GRP vs. Telkom Indonesia Tbk
Performance |
Timeline |
INSURANCE AUST GRP |
Telkom Indonesia Tbk |
INSURANCE AUST and Telkom Indonesia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with INSURANCE AUST and Telkom Indonesia
The main advantage of trading using opposite INSURANCE AUST and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST 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.INSURANCE AUST vs. ON SEMICONDUCTOR | INSURANCE AUST vs. TRI CHEMICAL LABORATINC | INSURANCE AUST vs. Semiconductor Manufacturing International | INSURANCE AUST vs. Sekisui Chemical Co |
Telkom Indonesia vs. TYSON FOODS A | Telkom Indonesia vs. Coor Service Management | Telkom Indonesia vs. COFCO Joycome Foods | Telkom Indonesia vs. Cleanaway Waste Management |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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