Correlation Between Glencore PLC and Telkom
Can any of the company-specific risk be diversified away by investing in both Glencore PLC and Telkom 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 Glencore PLC and Telkom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glencore PLC and Telkom, you can compare the effects of market volatilities on Glencore PLC and Telkom 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 Glencore PLC with a short position of Telkom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Telkom.
Diversification Opportunities for Glencore PLC and Telkom
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Glencore and Telkom is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and Telkom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom and Glencore PLC 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 Glencore PLC are associated (or correlated) with Telkom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom has no effect on the direction of Glencore PLC i.e., Glencore PLC and Telkom go up and down completely randomly.
Pair Corralation between Glencore PLC and Telkom
Assuming the 90 days trading horizon Glencore PLC is expected to under-perform the Telkom. In addition to that, Glencore PLC is 1.02 times more volatile than Telkom. It trades about -0.01 of its total potential returns per unit of risk. Telkom is currently generating about 0.25 per unit of volatility. If you would invest 273,700 in Telkom on September 13, 2024 and sell it today you would earn a total of 81,700 from holding Telkom or generate 29.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Glencore PLC vs. Telkom
Performance |
Timeline |
Glencore PLC |
Telkom |
Glencore PLC and Telkom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Glencore PLC and Telkom
The main advantage of trading using opposite Glencore PLC and Telkom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC position performs unexpectedly, Telkom 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 will offset losses from the drop in Telkom's long position.Glencore PLC vs. African Rainbow Minerals | Glencore PLC vs. Jubilee Platinum | Glencore PLC vs. Europa Metals | Glencore PLC vs. Sasol Ltd Bee |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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