Correlation Between Telkom Indonesia and Sanyo Chemical

Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Sanyo Chemical 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 Sanyo Chemical 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 Sanyo Chemical Industries, you can compare the effects of market volatilities on Telkom Indonesia and Sanyo Chemical 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 Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Sanyo Chemical.

Diversification Opportunities for Telkom Indonesia and Sanyo Chemical

0.61

Correlation Coefficient

Telkom Indonesia  Sanyo Chemical

Poor diversification

The 3 months correlation between Telkom and Sanyo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Sanyo Chemical go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Sanyo Chemical

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Sanyo Chemical. In addition to that, Telkom Indonesia is 4.88 times more volatile than Sanyo Chemical Industries. It trades about -0.05 of its total potential returns per unit of risk. Sanyo Chemical Industries is currently generating about -0.04 per unit of volatility. If you would invest  2,500  in Sanyo Chemical Industries on October 9, 2024 and sell it today you would lose (20.00) from holding Sanyo Chemical Industries or give up 0.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.12%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Sanyo Chemical Industries

Telkom Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telkom Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Sanyo Chemical Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanyo Chemical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sanyo Chemical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Telkom Indonesia and Sanyo Chemical

The main advantage of trading using opposite Telkom Indonesia and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Sanyo Chemical 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 Sanyo Chemical will offset losses from the drop in Sanyo Chemical's long position.

The idea behind Telkom Indonesia Tbk and Sanyo Chemical Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.