Correlation Between Telkom Indonesia and Shionogi

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

Diversification Opportunities for Telkom Indonesia and Shionogi

-0.5

Correlation Coefficient

Telkom Indonesia  Shionogi

Very good diversification

The 3 months correlation between Telkom and Shionogi is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Shionogi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi 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 Shionogi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shionogi has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Shionogi go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Shionogi

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Shionogi. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.43 times less risky than Shionogi. The stock trades about -0.15 of its potential returns per unit of risk. The Shionogi Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,240  in Shionogi Co on September 23, 2024 and sell it today you would earn a total of  90.00  from holding Shionogi Co or generate 7.26% 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.  Shionogi Co

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 comparatively stable basic indicators, Telkom Indonesia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Shionogi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shionogi Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Shionogi is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Telkom Indonesia and Shionogi

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

The idea behind Telkom Indonesia Tbk and Shionogi Co 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.