Correlation Between Telkom Indonesia and ENTERGY

Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and ENTERGY 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 ENTERGY 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 ENTERGY, you can compare the effects of market volatilities on Telkom Indonesia and ENTERGY 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 ENTERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and ENTERGY.

Diversification Opportunities for Telkom Indonesia and ENTERGY

-0.73

Correlation Coefficient

Telkom Indonesia  ENTERGY

Pay attention - limited upside

The 3 months correlation between Telkom and ENTERGY is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and ENTERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENTERGY 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 ENTERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENTERGY has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and ENTERGY go up and down completely randomly.

Pair Corralation between Telkom Indonesia and ENTERGY

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 4.46 times more return on investment than ENTERGY. However, Telkom Indonesia is 4.46 times more volatile than ENTERGY. It trades about 0.02 of its potential returns per unit of risk. ENTERGY is currently generating about -0.07 per unit of risk. If you would invest  15.00  in Telkom Indonesia Tbk on October 1, 2024 and sell it today you would earn a total of  0.00  from holding Telkom Indonesia Tbk or generate 0.0% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  ENTERGY

Telkom Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telkom Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Telkom Indonesia is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ENTERGY

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ENTERGY are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ENTERGY unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and ENTERGY

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

The idea behind Telkom Indonesia Tbk and ENTERGY 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.