Correlation Between Telkom Indonesia and Tokyu REIT

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

Diversification Opportunities for Telkom Indonesia and Tokyu REIT

-0.86

Correlation Coefficient

Telkom Indonesia  Tokyu REIT

Pay attention - limited upside

The 3 months correlation between Telkom and Tokyu is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Tokyu REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyu REIT 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 Tokyu REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyu REIT has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Tokyu REIT go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Tokyu REIT

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to generate 0.07 times more return on investment than Tokyu REIT. However, Telkom Indonesia Tbk is 15.13 times less risky than Tokyu REIT. It trades about -0.04 of its potential returns per unit of risk. Tokyu REIT is currently generating about -0.14 per unit of risk. If you would invest  2,337  in Telkom Indonesia Tbk on October 5, 2024 and sell it today you would lose (679.00) from holding Telkom Indonesia Tbk or give up 29.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	10.32%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Tokyu REIT

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 latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Tokyu REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tokyu REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tokyu REIT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Telkom Indonesia and Tokyu REIT

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

The idea behind Telkom Indonesia Tbk and Tokyu REIT 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.