Correlation Between Smartfren Telecom and Fast Food
Can any of the company-specific risk be diversified away by investing in both Smartfren Telecom and Fast Food 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 Fast Food 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 Fast Food Indonesia, you can compare the effects of market volatilities on Smartfren Telecom and Fast Food 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 Fast Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smartfren Telecom and Fast Food.
Diversification Opportunities for Smartfren Telecom and Fast Food
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smartfren and Fast is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Smartfren Telecom Tbk and Fast Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Food Indonesia 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 Fast Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Food Indonesia has no effect on the direction of Smartfren Telecom i.e., Smartfren Telecom and Fast Food go up and down completely randomly.
Pair Corralation between Smartfren Telecom and Fast Food
Assuming the 90 days trading horizon Smartfren Telecom Tbk is expected to generate 0.84 times more return on investment than Fast Food. However, Smartfren Telecom Tbk is 1.19 times less risky than Fast Food. It trades about -0.12 of its potential returns per unit of risk. Fast Food Indonesia is currently generating about -0.41 per unit of risk. If you would invest 2,700 in Smartfren Telecom Tbk on August 30, 2024 and sell it today you would lose (200.00) from holding Smartfren Telecom Tbk or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smartfren Telecom Tbk vs. Fast Food Indonesia
Performance |
| Timeline |
| Smartfren Telecom Tbk |
| Fast Food Indonesia |
Smartfren Telecom and Fast Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smartfren Telecom and Fast Food
The main advantage of trading using opposite Smartfren Telecom and Fast Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smartfren Telecom position performs unexpectedly, Fast Food 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 Fast Food will offset losses from the drop in Fast Food's long position.| Smartfren Telecom vs. Bank Artos Indonesia | Smartfren Telecom vs. PT Bukalapak | Smartfren Telecom vs. Sumber Alfaria Trijaya | Smartfren Telecom vs. Merdeka Copper Gold |
| Fast Food vs. Hero Supermarket Tbk | Fast Food vs. Indoritel Makmur Internasional | Fast Food vs. Enseval Putra Megatrading | Fast Food vs. Fks Multi Agro |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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