Correlation Between Smartfren Telecom and First Media
Can any of the company-specific risk be diversified away by investing in both Smartfren Telecom and First Media 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 First Media 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 First Media Tbk, you can compare the effects of market volatilities on Smartfren Telecom and First Media 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 First Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smartfren Telecom and First Media.
Diversification Opportunities for Smartfren Telecom and First Media
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Smartfren and First is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Smartfren Telecom Tbk and First Media Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Media 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 First Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Media Tbk has no effect on the direction of Smartfren Telecom i.e., Smartfren Telecom and First Media go up and down completely randomly.
Pair Corralation between Smartfren Telecom and First Media
Assuming the 90 days trading horizon Smartfren Telecom Tbk is expected to generate 1.02 times more return on investment than First Media. However, Smartfren Telecom is 1.02 times more volatile than First Media Tbk. It trades about 0.19 of its potential returns per unit of risk. First Media Tbk is currently generating about -0.08 per unit of risk. If you would invest 2,200 in Smartfren Telecom Tbk on November 3, 2024 and sell it today you would earn a total of 200.00 from holding Smartfren Telecom Tbk or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smartfren Telecom Tbk vs. First Media Tbk
Performance |
| Timeline |
| Smartfren Telecom Tbk |
| First Media Tbk |
Smartfren Telecom and First Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smartfren Telecom and First Media
The main advantage of trading using opposite Smartfren Telecom and First Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smartfren Telecom position performs unexpectedly, First Media 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 First Media will offset losses from the drop in First Media'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 |
| First Media vs. Fast Food Indonesia | First Media vs. Garudafood Putra Putri | First Media vs. HK Metals Utama | First Media vs. Alumindo Light Metal |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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