Correlation Between ATN International and PT Indosat

Can any of the company-specific risk be diversified away by investing in both ATN International and PT Indosat 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 ATN International and PT Indosat into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATN International and PT Indosat Tbk, you can compare the effects of market volatilities on ATN International and PT Indosat 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 ATN International with a short position of PT Indosat. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATN International and PT Indosat.

Diversification Opportunities for ATN International and PT Indosat

0.53

Correlation Coefficient

ATN International  PT Indosat

Very weak diversification

The 3 months correlation between ATN and PTITF is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ATN International and PT Indosat Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indosat Tbk and ATN International 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 ATN International are associated (or correlated) with PT Indosat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indosat Tbk has no effect on the direction of ATN International i.e., ATN International and PT Indosat go up and down completely randomly.

Pair Corralation between ATN International and PT Indosat

Given the investment horizon of 90 days ATN International is expected to generate 0.5 times more return on investment than PT Indosat. However, ATN International is 2.01 times less risky than PT Indosat. It trades about -0.2 of its potential returns per unit of risk. PT Indosat Tbk is currently generating about -0.14 per unit of risk. If you would invest  3,149  in ATN International on September 26, 2024 and sell it today you would lose (1,495) from holding ATN International or give up 47.48% of portfolio value over 90 days.

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

ATN International  vs.  PT Indosat Tbk

ATN International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATN International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

PT Indosat Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indosat Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ATN International and PT Indosat

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

The idea behind ATN International and PT Indosat Tbk 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.