Correlation Between Telkom Indonesia and Great Elm

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Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Great Elm 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 Telkom Indonesia and Great Elm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telkom Indonesia Tbk and Great Elm Capital, you can compare the effects of market volatilities on Telkom Indonesia and Great Elm 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 Telkom Indonesia with a short position of Great Elm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Great Elm.

Diversification Opportunities for Telkom Indonesia and Great Elm

-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Telkom and Great is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Great Elm Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Elm Capital and Telkom Indonesia 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 Telkom Indonesia Tbk are associated (or correlated) with Great Elm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Elm Capital has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Great Elm go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Great Elm

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Great Elm. In addition to that, Telkom Indonesia is 3.67 times more volatile than Great Elm Capital. It trades about -0.09 of its total potential returns per unit of risk. Great Elm Capital is currently generating about 0.06 per unit of volatility. If you would invest  2,408  in Great Elm Capital on September 1, 2024 and sell it today you would earn a total of  95.00  from holding Great Elm Capital or generate 3.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy80.32%
ValuesDaily Returns

Telkom Indonesia Tbk  vs.  Great Elm Capital

 Performance 
       Timeline  
Telkom Indonesia Tbk 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Telkom Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Great Elm Capital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Insignificant
Over the last 90 days Great Elm Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Great Elm is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Telkom Indonesia and Great Elm Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Telkom Indonesia and Great Elm

The main advantage of trading using opposite Telkom Indonesia and Great Elm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Great Elm 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 Great Elm will offset losses from the drop in Great Elm's long position.
The idea behind Telkom Indonesia Tbk and Great Elm Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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