Correlation Between Telkom Indonesia and ImagineAR

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

Diversification Opportunities for Telkom Indonesia and ImagineAR

-0.34

Correlation Coefficient

Telkom Indonesia  ImagineAR

Very good diversification

The 3 months correlation between Telkom and ImagineAR is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and ImagineAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImagineAR 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 ImagineAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImagineAR has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and ImagineAR go up and down completely randomly.

Pair Corralation between Telkom Indonesia and ImagineAR

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 0.5 times more return on investment than ImagineAR. However, Telkom Indonesia Tbk is 2.01 times less risky than ImagineAR. It trades about -0.06 of its potential returns per unit of risk. ImagineAR is currently generating about -0.21 per unit of risk. If you would invest  15.00  in Telkom Indonesia Tbk on September 23, 2024 and sell it today you would lose (1.00) from holding Telkom Indonesia Tbk or give up 6.67% of portfolio value over 90 days.

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

Telkom Indonesia Tbk  vs.  ImagineAR

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 latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ImagineAR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ImagineAR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, ImagineAR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and ImagineAR

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

The idea behind Telkom Indonesia Tbk and ImagineAR 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.