Correlation Between Telkom Indonesia and Kimberly Clark

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

Diversification Opportunities for Telkom Indonesia and Kimberly Clark

0.84

Correlation Coefficient

Telkom Indonesia  Kimberly Clark

Very poor diversification

The 3 months correlation between Telkom and Kimberly is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Kimberly Clark de Mexico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark de 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 Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark de has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Kimberly Clark go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Kimberly Clark

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Kimberly Clark. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.35 times less risky than Kimberly Clark. The stock trades about -0.09 of its potential returns per unit of risk. The Kimberly Clark de Mexico is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,052  in Kimberly Clark de Mexico on September 17, 2024 and sell it today you would lose (336.00) from holding Kimberly Clark de Mexico or give up 31.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.6%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Kimberly Clark de Mexico

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. Despite uncertain performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kimberly Clark de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimberly Clark de Mexico has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Telkom Indonesia and Kimberly Clark

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

The idea behind Telkom Indonesia Tbk and Kimberly Clark de Mexico 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.