Correlation Between Telkom Indonesia and ZURICH INSURANCE

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

Diversification Opportunities for Telkom Indonesia and ZURICH INSURANCE

-0.35

Correlation Coefficient

Telkom Indonesia  ZURICH INSURANCE

Very good diversification

The 3 months correlation between Telkom and ZURICH is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and ZURICH INSURANCE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZURICH INSURANCE 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 ZURICH INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZURICH INSURANCE has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and ZURICH INSURANCE go up and down completely randomly.

Pair Corralation between Telkom Indonesia and ZURICH INSURANCE

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the ZURICH INSURANCE. In addition to that, Telkom Indonesia is 6.55 times more volatile than ZURICH INSURANCE GROUP. It trades about -0.03 of its total potential returns per unit of risk. ZURICH INSURANCE GROUP is currently generating about -0.16 per unit of volatility. If you would invest  2,960  in ZURICH INSURANCE GROUP on October 10, 2024 and sell it today you would lose (80.00) from holding ZURICH INSURANCE GROUP or give up 2.7% of portfolio value over 90 days.

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

Telkom Indonesia Tbk  vs.  ZURICH INSURANCE GROUP

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

ZURICH INSURANCE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZURICH INSURANCE GROUP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, ZURICH INSURANCE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Telkom Indonesia and ZURICH INSURANCE

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

The idea behind Telkom Indonesia Tbk and ZURICH INSURANCE GROUP 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.