Correlation Between Telkom Indonesia and Covalon Technologies
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Covalon Technologies 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 Covalon Technologies 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 Covalon Technologies, you can compare the effects of market volatilities on Telkom Indonesia and Covalon Technologies 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 Covalon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Covalon Technologies.
Diversification Opportunities for Telkom Indonesia and Covalon Technologies
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telkom and Covalon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Covalon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covalon Technologies 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 Covalon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covalon Technologies has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Covalon Technologies go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Covalon Technologies
Assuming the 90 days horizon Telkom Indonesia Tbk is expected to under-perform the Covalon Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.92 times less risky than Covalon Technologies. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Covalon Technologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 80.00 in Covalon Technologies on February 20, 2024 and sell it today you would earn a total of 0.00 from holding Covalon Technologies or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Telkom Indonesia Tbk vs. Covalon Technologies
Performance |
Timeline |
Telkom Indonesia Tbk |
Covalon Technologies |
Telkom Indonesia and Covalon Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Telkom Indonesia and Covalon Technologies
The main advantage of trading using opposite Telkom Indonesia and Covalon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Covalon Technologies 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 Covalon Technologies will offset losses from the drop in Covalon Technologies' long position.Telkom Indonesia vs. BCE Inc | Telkom Indonesia vs. American Nortel Communications | Telkom Indonesia vs. HUMANA INC | Telkom Indonesia vs. Aquagold International |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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