Correlation Between Telkom Indonesia and Zimmer Biomet

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

Diversification Opportunities for Telkom Indonesia and Zimmer Biomet

-0.57

Correlation Coefficient

Telkom Indonesia  Zimmer Biomet

Excellent diversification

The 3 months correlation between Telkom and Zimmer is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Zimmer Biomet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimmer Biomet Holdings 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 Zimmer Biomet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zimmer Biomet Holdings has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Zimmer Biomet go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Zimmer Biomet

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 11.46 times more return on investment than Zimmer Biomet. However, Telkom Indonesia is 11.46 times more volatile than Zimmer Biomet Holdings. It trades about 0.05 of its potential returns per unit of risk. Zimmer Biomet Holdings is currently generating about -0.24 per unit of risk. If you would invest  15.00  in Telkom Indonesia Tbk on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Telkom Indonesia Tbk or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Zimmer Biomet Holdings

Telkom Indonesia Tbk

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telkom Indonesia Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Telkom Indonesia reported solid returns over the last few months and may actually be approaching a breakup point.

Zimmer Biomet Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zimmer Biomet Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Zimmer Biomet may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Telkom Indonesia and Zimmer Biomet

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

The idea behind Telkom Indonesia Tbk and Zimmer Biomet Holdings 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.