Correlation Between Telkom Indonesia and Nichirei

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

Diversification Opportunities for Telkom Indonesia and Nichirei

-0.69

Correlation Coefficient

Telkom Indonesia  Nichirei

Excellent diversification

The 3 months correlation between Telkom and Nichirei is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Nichirei in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nichirei 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 Nichirei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nichirei has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Nichirei go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Nichirei

If you would invest  1,210  in Nichirei on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Nichirei or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Nichirei

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.

Nichirei

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nichirei are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Nichirei is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Telkom Indonesia and Nichirei

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

The idea behind Telkom Indonesia Tbk and Nichirei 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.

Check out your portfolio center.

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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.