Correlation Between Telkom Indonesia and Swiss Re
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Swiss Re 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 Swiss Re 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 Swiss Re AG, you can compare the effects of market volatilities on Telkom Indonesia and Swiss Re 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 Swiss Re. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Swiss Re.
Diversification Opportunities for Telkom Indonesia and Swiss Re
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Swiss is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Swiss Re AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Re AG 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 Swiss Re. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Re AG has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Swiss Re go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Swiss Re
Assuming the 90 days trading horizon Telkom Indonesia is expected to generate 1.67 times less return on investment than Swiss Re. In addition to that, Telkom Indonesia is 4.0 times more volatile than Swiss Re AG. It trades about 0.02 of its total potential returns per unit of risk. Swiss Re AG is currently generating about 0.11 per unit of volatility. If you would invest 3,020 in Swiss Re AG on September 23, 2024 and sell it today you would earn a total of 400.00 from holding Swiss Re AG or generate 13.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Telkom Indonesia Tbk vs. Swiss Re AG
Performance |
Timeline |
Telkom Indonesia Tbk |
Swiss Re AG |
Telkom Indonesia and Swiss Re Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Telkom Indonesia and Swiss Re
The main advantage of trading using opposite Telkom Indonesia and Swiss Re positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Swiss Re 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 Swiss Re will offset losses from the drop in Swiss Re's long position.Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. China Mobile Limited | Telkom Indonesia vs. Verizon Communications | Telkom Indonesia vs. ATT Inc |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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