Correlation Between Telkom Indonesia and MOLSON COORS

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

Diversification Opportunities for Telkom Indonesia and MOLSON COORS

-0.28

Correlation Coefficient

Telkom Indonesia  MOLSON COORS

Very good diversification

The 3 months correlation between Telkom and MOLSON is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and MOLSON RS BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOLSON RS BEVERAGE 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 MOLSON COORS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOLSON RS BEVERAGE has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and MOLSON COORS go up and down completely randomly.

Pair Corralation between Telkom Indonesia and MOLSON COORS

Assuming the 90 days trading horizon Telkom Indonesia is expected to generate 1.33 times less return on investment than MOLSON COORS. In addition to that, Telkom Indonesia is 2.23 times more volatile than MOLSON RS BEVERAGE. It trades about 0.03 of its total potential returns per unit of risk. MOLSON RS BEVERAGE is currently generating about 0.1 per unit of volatility. If you would invest  5,613  in MOLSON RS BEVERAGE on December 21, 2024 and sell it today you would earn a total of  987.00  from holding MOLSON RS BEVERAGE or generate 17.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  MOLSON RS BEVERAGE

Telkom Indonesia Tbk

Risk-Adjusted Performance

Weak

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. In spite of comparatively uncertain basic indicators, Telkom Indonesia unveiled solid returns over the last few months and may actually be approaching a breakup point.

MOLSON RS BEVERAGE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MOLSON RS BEVERAGE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MOLSON COORS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and MOLSON COORS

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

The idea behind Telkom Indonesia Tbk and MOLSON RS BEVERAGE 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.