Correlation Between Telkom Indonesia and AstraZeneca PLC

Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and AstraZeneca PLC 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 AstraZeneca PLC 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 AstraZeneca PLC, you can compare the effects of market volatilities on Telkom Indonesia and AstraZeneca PLC 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 AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and AstraZeneca PLC.

Diversification Opportunities for Telkom Indonesia and AstraZeneca PLC

0.71

Correlation Coefficient

Telkom Indonesia  AstraZeneca PLC

Poor diversification

The 3 months correlation between Telkom and AstraZeneca is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and AstraZeneca PLC go up and down completely randomly.

Pair Corralation between Telkom Indonesia and AstraZeneca PLC

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the AstraZeneca PLC. In addition to that, Telkom Indonesia is 2.23 times more volatile than AstraZeneca PLC. It trades about -0.02 of its total potential returns per unit of risk. AstraZeneca PLC is currently generating about -0.04 per unit of volatility. If you would invest  13,195  in AstraZeneca PLC on September 4, 2024 and sell it today you would lose (415.00) from holding AstraZeneca PLC or give up 3.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  AstraZeneca PLC

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 latest uncertain performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AstraZeneca PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AstraZeneca PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Telkom Indonesia and AstraZeneca PLC

The main advantage of trading using opposite Telkom Indonesia and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.

The idea behind Telkom Indonesia Tbk and AstraZeneca PLC 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.