Correlation Between Indosat Tbk and XL Axiata
Can any of the company-specific risk be diversified away by investing in both Indosat Tbk and XL Axiata 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 Indosat Tbk and XL Axiata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indosat Tbk and XL Axiata Tbk, you can compare the effects of market volatilities on Indosat Tbk and XL Axiata 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 Indosat Tbk with a short position of XL Axiata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosat Tbk and XL Axiata.
Diversification Opportunities for Indosat Tbk and XL Axiata
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indosat and EXCL is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Indosat Tbk and XL Axiata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XL Axiata Tbk and Indosat Tbk 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 Indosat Tbk are associated (or correlated) with XL Axiata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XL Axiata Tbk has no effect on the direction of Indosat Tbk i.e., Indosat Tbk and XL Axiata go up and down completely randomly.
Pair Corralation between Indosat Tbk and XL Axiata
Assuming the 90 days trading horizon Indosat Tbk is expected to generate 3.76 times more return on investment than XL Axiata. However, Indosat Tbk is 3.76 times more volatile than XL Axiata Tbk. It trades about 0.04 of its potential returns per unit of risk. XL Axiata Tbk is currently generating about -0.16 per unit of risk. If you would invest 232,000 in Indosat Tbk on August 31, 2024 and sell it today you would earn a total of 5,000 from holding Indosat Tbk or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indosat Tbk vs. XL Axiata Tbk
Performance |
| Timeline |
| Indosat Tbk |
| XL Axiata Tbk |
Indosat Tbk and XL Axiata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indosat Tbk and XL Axiata
The main advantage of trading using opposite Indosat Tbk and XL Axiata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indosat Tbk position performs unexpectedly, XL Axiata 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 XL Axiata will offset losses from the drop in XL Axiata's long position.| Indosat Tbk vs. Astra Agro Lestari | Indosat Tbk vs. Vale Indonesia Tbk | Indosat Tbk vs. Timah Persero Tbk | Indosat Tbk vs. Medco Energi Internasional |
| XL Axiata vs. Indosat Tbk | XL Axiata vs. Jasa Marga Tbk | XL Axiata vs. Indocement Tunggal Prakarsa | XL Axiata vs. Semen Indonesia Persero |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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