Correlation Between Stepstone and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Stepstone 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 Stepstone and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Stepstone 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 Stepstone with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Telkom Indonesia.
Diversification Opportunities for Stepstone and Telkom Indonesia
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stepstone and Telkom is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group 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 Stepstone 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 Stepstone Group 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 Stepstone i.e., Stepstone and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Stepstone and Telkom Indonesia
Given the investment horizon of 90 days Stepstone Group is expected to under-perform the Telkom Indonesia. In addition to that, Stepstone is 1.89 times more volatile than Telkom Indonesia Tbk. It trades about -0.1 of its total potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.06 per unit of volatility. If you would invest 1,496 in Telkom Indonesia Tbk on January 13, 2025 and sell it today you would lose (66.00) from holding Telkom Indonesia Tbk or give up 4.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| Stepstone Group |
| Telkom Indonesia Tbk |
Stepstone and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Telkom Indonesia
The main advantage of trading using opposite Stepstone and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone 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.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| Telkom Indonesia vs. Liberty Broadband Srs | Telkom Indonesia vs. Cable One | Telkom Indonesia vs. Liberty Broadband Corp | Telkom Indonesia vs. Liberty Global PLC |
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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