Correlation Between Zillow and Telkom Indonesia

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

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

Diversification Opportunities for Zillow and Telkom Indonesia

0.22

Correlation Coefficient

Zillow  Telkom Indonesia

Modest diversification

The 3 months correlation between Zillow and Telkom is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Zillow Group 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 Zillow 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 Zillow Group 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 Zillow i.e., Zillow and Telkom Indonesia go up and down completely randomly.

Pair Corralation between Zillow and Telkom Indonesia

Allowing for the 90-day total investment horizon Zillow Group is expected to generate 1.14 times more return on investment than Telkom Indonesia. However, Zillow is 1.14 times more volatile than Telkom Indonesia Tbk. It trades about -0.01 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.06 per unit of risk. If you would invest  7,130  in Zillow Group on December 28, 2024 and sell it today you would lose (250.00) from holding Zillow Group or give up 3.51% of portfolio value over 90 days.

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

Zillow Group  vs.  Telkom Indonesia Tbk

Zillow Group

Risk-Adjusted Performance

Very Weak

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

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 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.

Pair Trading with Zillow and Telkom Indonesia

The main advantage of trading using opposite Zillow and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zillow 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 Zillow Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.