Correlation Between Communication Cable and Smartfren Telecom
Can any of the company-specific risk be diversified away by investing in both Communication Cable and Smartfren Telecom 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 Communication Cable and Smartfren Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Communication Cable Systems and Smartfren Telecom Tbk, you can compare the effects of market volatilities on Communication Cable and Smartfren Telecom 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 Communication Cable with a short position of Smartfren Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Communication Cable and Smartfren Telecom.
Diversification Opportunities for Communication Cable and Smartfren Telecom
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Communication and Smartfren is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Communication Cable Systems and Smartfren Telecom Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartfren Telecom Tbk and Communication Cable 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 Communication Cable Systems are associated (or correlated) with Smartfren Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartfren Telecom Tbk has no effect on the direction of Communication Cable i.e., Communication Cable and Smartfren Telecom go up and down completely randomly.
Pair Corralation between Communication Cable and Smartfren Telecom
Assuming the 90 days trading horizon Communication Cable Systems is expected to generate 2.44 times more return on investment than Smartfren Telecom. However, Communication Cable is 2.44 times more volatile than Smartfren Telecom Tbk. It trades about 0.08 of its potential returns per unit of risk. Smartfren Telecom Tbk is currently generating about -0.12 per unit of risk. If you would invest 24,600 in Communication Cable Systems on August 30, 2024 and sell it today you would earn a total of 2,000 from holding Communication Cable Systems or generate 8.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Communication Cable Systems vs. Smartfren Telecom Tbk
Performance |
| Timeline |
| Communication Cable |
| Smartfren Telecom Tbk |
Communication Cable and Smartfren Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Communication Cable and Smartfren Telecom
The main advantage of trading using opposite Communication Cable and Smartfren Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Communication Cable position performs unexpectedly, Smartfren Telecom 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 Smartfren Telecom will offset losses from the drop in Smartfren Telecom's long position.| Communication Cable vs. Berkah Prima Perkasa | Communication Cable vs. Hartadinata Abadi Tbk | Communication Cable vs. Estika Tata Tiara | Communication Cable vs. Garudafood Putra Putri |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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