Correlation Between Telkom Indonesia and Knorr-Bremse Aktiengesellscha

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

Diversification Opportunities for Telkom Indonesia and Knorr-Bremse Aktiengesellscha

-0.71

Correlation Coefficient

Telkom Indonesia  Knorr-Bremse Aktiengesellscha

Pay attention - limited upside

The 3 months correlation between Telkom and Knorr-Bremse is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Knorr Bremse Aktiengesellschaf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knorr-Bremse Aktiengesellscha 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 Knorr-Bremse Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knorr-Bremse Aktiengesellscha has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Knorr-Bremse Aktiengesellscha go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Knorr-Bremse Aktiengesellscha

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Knorr-Bremse Aktiengesellscha. In addition to that, Telkom Indonesia is 1.04 times more volatile than Knorr Bremse Aktiengesellschaft. It trades about -0.02 of its total potential returns per unit of risk. Knorr Bremse Aktiengesellschaft is currently generating about 0.3 per unit of volatility. If you would invest  1,765  in Knorr Bremse Aktiengesellschaft on December 19, 2024 and sell it today you would earn a total of  810.00  from holding Knorr Bremse Aktiengesellschaft or generate 45.89% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  Knorr Bremse Aktiengesellschaf

Telkom Indonesia Tbk

Risk-Adjusted Performance

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 quite persistent essential indicators, Telkom Indonesia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Knorr-Bremse Aktiengesellscha

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Knorr Bremse Aktiengesellschaft are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Knorr-Bremse Aktiengesellscha showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and Knorr-Bremse Aktiengesellscha

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

The idea behind Telkom Indonesia Tbk and Knorr Bremse Aktiengesellschaft 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.