Correlation Between Telkom Indonesia and Pegasus Tel
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Pegasus Tel 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 Pegasus Tel 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 Pegasus Tel, you can compare the effects of market volatilities on Telkom Indonesia and Pegasus Tel 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 Pegasus Tel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Pegasus Tel.
Diversification Opportunities for Telkom Indonesia and Pegasus Tel
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Pegasus is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Pegasus Tel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasus Tel 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 Pegasus Tel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasus Tel has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Pegasus Tel go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Pegasus Tel
Assuming the 90 days horizon Telkom Indonesia Tbk is expected to generate 0.44 times more return on investment than Pegasus Tel. However, Telkom Indonesia Tbk is 2.27 times less risky than Pegasus Tel. It trades about 0.09 of its potential returns per unit of risk. Pegasus Tel is currently generating about 0.01 per unit of risk. If you would invest 16.00 in Telkom Indonesia Tbk on September 6, 2024 and sell it today you would earn a total of 3.00 from holding Telkom Indonesia Tbk or generate 18.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Telkom Indonesia Tbk vs. Pegasus Tel
Performance |
Timeline |
Telkom Indonesia Tbk |
Pegasus Tel |
Telkom Indonesia and Pegasus Tel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Telkom Indonesia and Pegasus Tel
The main advantage of trading using opposite Telkom Indonesia and Pegasus Tel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Pegasus Tel 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 Pegasus Tel will offset losses from the drop in Pegasus Tel's long position.Telkom Indonesia vs. Verizon Communications | Telkom Indonesia vs. ATT Inc | Telkom Indonesia vs. Comcast Corp |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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