Correlation Between Indosat Tbk and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Indosat Tbk and Telkom Indonesia 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 Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indosat Tbk and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Indosat Tbk and Telkom Indonesia 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 Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosat Tbk and Telkom Indonesia.
Diversification Opportunities for Indosat Tbk and Telkom Indonesia
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indosat and Telkom is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Indosat Tbk and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia 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 Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of Indosat Tbk i.e., Indosat Tbk and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Indosat Tbk and Telkom Indonesia
Assuming the 90 days trading horizon Indosat Tbk is expected to generate 1.47 times more return on investment than Telkom Indonesia. However, Indosat Tbk is 1.47 times more volatile than Telkom Indonesia Tbk. It trades about 0.02 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.04 per unit of risk. If you would invest 243,000 in Indosat Tbk on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Indosat 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 |
Indosat Tbk vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| Indosat Tbk |
| Telkom Indonesia Tbk |
Indosat Tbk and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indosat Tbk and Telkom Indonesia
The main advantage of trading using opposite Indosat Tbk and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indosat Tbk position performs unexpectedly, Telkom Indonesia 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 Telkom Indonesia will offset losses from the drop in Telkom Indonesia'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 |
| Telkom Indonesia vs. Astra International Tbk | Telkom Indonesia vs. Bank Rakyat Indonesia | Telkom Indonesia vs. Bank Mandiri Persero | Telkom Indonesia vs. Bank Central Asia |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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