Correlation Between Smartfren Telecom and Indointernet Tbk
Can any of the company-specific risk be diversified away by investing in both Smartfren Telecom and Indointernet Tbk 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 Smartfren Telecom and Indointernet Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smartfren Telecom Tbk and Indointernet Tbk PT, you can compare the effects of market volatilities on Smartfren Telecom and Indointernet Tbk 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 Smartfren Telecom with a short position of Indointernet Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smartfren Telecom and Indointernet Tbk.
Diversification Opportunities for Smartfren Telecom and Indointernet Tbk
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smartfren and Indointernet is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Smartfren Telecom Tbk and Indointernet Tbk PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indointernet Tbk and Smartfren Telecom 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 Smartfren Telecom Tbk are associated (or correlated) with Indointernet Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indointernet Tbk has no effect on the direction of Smartfren Telecom i.e., Smartfren Telecom and Indointernet Tbk go up and down completely randomly.
Pair Corralation between Smartfren Telecom and Indointernet Tbk
Assuming the 90 days trading horizon Smartfren Telecom Tbk is expected to generate 1.85 times more return on investment than Indointernet Tbk. However, Smartfren Telecom is 1.85 times more volatile than Indointernet Tbk PT. It trades about 0.01 of its potential returns per unit of risk. Indointernet Tbk PT is currently generating about -0.2 per unit of risk. If you would invest 2,300 in Smartfren Telecom Tbk on November 18, 2024 and sell it today you would earn a total of 0.00 from holding Smartfren Telecom Tbk or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smartfren Telecom Tbk vs. Indointernet Tbk PT
Performance |
| Timeline |
| Smartfren Telecom Tbk |
| Indointernet Tbk |
Smartfren Telecom and Indointernet Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smartfren Telecom and Indointernet Tbk
The main advantage of trading using opposite Smartfren Telecom and Indointernet Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smartfren Telecom position performs unexpectedly, Indointernet Tbk 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 Indointernet Tbk will offset losses from the drop in Indointernet Tbk's long position.| Smartfren Telecom vs. Indosat Tbk | Smartfren Telecom vs. XL Axiata Tbk | Smartfren Telecom vs. Energi Mega Persada | Smartfren Telecom vs. Bakrie Brothers Tbk |
| Indointernet Tbk vs. DCI Indonesia Tbk | Indointernet Tbk vs. Digital Mediatama Maxima | Indointernet Tbk vs. Multipolar Technology Tbk | Indointernet Tbk vs. Bank Net Indonesia |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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