Correlation Between SEALED AIR and Telkom Indonesia

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

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

Diversification Opportunities for SEALED AIR and Telkom Indonesia

-0.56

Correlation Coefficient

SEALED AIR  Telkom Indonesia

Excellent diversification

The 3 months correlation between SEALED and Telkom is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR 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 SEALED AIR 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 SEALED AIR 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 SEALED AIR i.e., SEALED AIR and Telkom Indonesia go up and down completely randomly.

Pair Corralation between SEALED AIR and Telkom Indonesia

Assuming the 90 days trading horizon SEALED AIR is expected to generate 0.25 times more return on investment than Telkom Indonesia. However, SEALED AIR is 3.94 times less risky than Telkom Indonesia. It trades about 0.12 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.01 per unit of risk. If you would invest  3,063  in SEALED AIR on September 18, 2024 and sell it today you would earn a total of  377.00  from holding SEALED AIR or generate 12.31% return on investment over 90 days.

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

SEALED AIR   vs.  Telkom Indonesia Tbk

SEALED AIR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SEALED AIR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SEALED AIR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Telkom Indonesia Tbk

Risk-Adjusted Performance

0 of 100

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 nearly stable forward indicators, Telkom Indonesia is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SEALED AIR and Telkom Indonesia

The main advantage of trading using opposite SEALED AIR and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR 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 SEALED AIR 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.