Correlation Between Indosat Tbk and Smartfren Telecom
Can any of the company-specific risk be diversified away by investing in both Indosat Tbk 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 Indosat Tbk and Smartfren Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indosat Tbk and Smartfren Telecom Tbk, you can compare the effects of market volatilities on Indosat Tbk 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 Indosat Tbk with a short position of Smartfren Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosat Tbk and Smartfren Telecom.
Diversification Opportunities for Indosat Tbk and Smartfren Telecom
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indosat and Smartfren is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Indosat Tbk 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 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 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 Indosat Tbk i.e., Indosat Tbk and Smartfren Telecom go up and down completely randomly.
Pair Corralation between Indosat Tbk and Smartfren Telecom
Assuming the 90 days trading horizon Indosat Tbk is expected to generate 1.44 times more return on investment than Smartfren Telecom. However, Indosat Tbk is 1.44 times more volatile than Smartfren Telecom Tbk. It trades about 0.0 of its potential returns per unit of risk. Smartfren Telecom Tbk is currently generating about -0.06 per unit of risk. If you would invest 532,254 in Indosat Tbk on September 3, 2024 and sell it today you would lose (289,254) from holding Indosat Tbk or give up 54.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indosat Tbk vs. Smartfren Telecom Tbk
Performance |
| Timeline |
| Indosat Tbk |
| Smartfren Telecom Tbk |
Indosat Tbk and Smartfren Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indosat Tbk and Smartfren Telecom
The main advantage of trading using opposite Indosat Tbk and Smartfren Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indosat Tbk 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.| Indosat Tbk vs. Astra Agro Lestari | Indosat Tbk vs. Vale Indonesia Tbk | Indosat Tbk vs. Timah Persero Tbk | Indosat Tbk vs. Medco Energi Internasional |
| Smartfren Telecom vs. Indosat Tbk | Smartfren Telecom vs. Energi Mega Persada | Smartfren Telecom vs. Mitra Pinasthika Mustika | Smartfren Telecom vs. Jakarta Int Hotels |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Stocks Directory Find actively traded stocks across global markets |