Correlation Between Telekom Malaysia and TIME Dotcom

Can any of the company-specific risk be diversified away by investing in both Telekom Malaysia and TIME Dotcom 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 Telekom Malaysia and TIME Dotcom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Telekom Malaysia Bhd and TIME Dotcom Bhd, you can compare the effects of market volatilities on Telekom Malaysia and TIME Dotcom 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 Telekom Malaysia with a short position of TIME Dotcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telekom Malaysia and TIME Dotcom.

Diversification Opportunities for Telekom Malaysia and TIME Dotcom

-0.24

Correlation Coefficient

Telekom Malaysia  TIME Dotcom

Very good diversification

The 3 months correlation between Telekom and TIME is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Telekom Malaysia Bhd and TIME Dotcom Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIME Dotcom Bhd and Telekom Malaysia 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 Telekom Malaysia Bhd are associated (or correlated) with TIME Dotcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIME Dotcom Bhd has no effect on the direction of Telekom Malaysia i.e., Telekom Malaysia and TIME Dotcom go up and down completely randomly.

Pair Corralation between Telekom Malaysia and TIME Dotcom

Assuming the 90 days trading horizon Telekom Malaysia Bhd is expected to generate 1.17 times more return on investment than TIME Dotcom. However, Telekom Malaysia is 1.17 times more volatile than TIME Dotcom Bhd. It trades about 0.08 of its potential returns per unit of risk. TIME Dotcom Bhd is currently generating about -0.03 per unit of risk. If you would invest  530.00  in Telekom Malaysia Bhd on September 24, 2024 and sell it today you would earn a total of  142.00  from holding Telekom Malaysia Bhd or generate 26.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Telekom Malaysia Bhd  vs.  TIME Dotcom Bhd

Telekom Malaysia Bhd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Telekom Malaysia Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Telekom Malaysia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

TIME Dotcom Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TIME Dotcom Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, TIME Dotcom is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Telekom Malaysia and TIME Dotcom

The main advantage of trading using opposite Telekom Malaysia and TIME Dotcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telekom Malaysia position performs unexpectedly, TIME Dotcom 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 TIME Dotcom will offset losses from the drop in TIME Dotcom's long position.

The idea behind Telekom Malaysia Bhd and TIME Dotcom Bhd 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.