Correlation Between Vishay Intertechnology and Telkom Indonesia

Can any of the company-specific risk be diversified away by investing in both Vishay Intertechnology and Telkom Indonesia 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 Vishay Intertechnology and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vishay Intertechnology and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Vishay Intertechnology and Telkom Indonesia 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 Vishay Intertechnology with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vishay Intertechnology and Telkom Indonesia.

Diversification Opportunities for Vishay Intertechnology and Telkom Indonesia

0.09

Correlation Coefficient

Vishay Intertechnology  Telkom Indonesia

Significant diversification

The 3 months correlation between Vishay and Telkom is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk and Vishay Intertechnology 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 Vishay Intertechnology are associated (or correlated) with Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and Telkom Indonesia go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and Telkom Indonesia

Assuming the 90 days trading horizon Vishay Intertechnology is expected to under-perform the Telkom Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, Vishay Intertechnology is 2.09 times less risky than Telkom Indonesia. The stock trades about -0.03 of its potential returns per unit of risk. The Telkom Indonesia Tbk is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Telkom Indonesia Tbk on October 4, 2024 and sell it today you would lose (6.00) from holding Telkom Indonesia Tbk or give up 28.57% of portfolio value over 90 days.

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

Vishay Intertechnology  vs.  Telkom Indonesia Tbk

Vishay Intertechnology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Intertechnology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Telkom Indonesia Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Telkom Indonesia Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Telkom Indonesia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vishay Intertechnology and Telkom Indonesia

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

The idea behind Vishay Intertechnology and Telkom Indonesia Tbk 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.