Correlation Between Telkom Indonesia and VOXX International

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

Diversification Opportunities for Telkom Indonesia and VOXX International

-0.44

Correlation Coefficient

Telkom Indonesia  VOXX International

Very good diversification

The 3 months correlation between Telkom and VOXX is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and VOXX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOXX International 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 VOXX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOXX International has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and VOXX International go up and down completely randomly.

Pair Corralation between Telkom Indonesia and VOXX International

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the VOXX International. In addition to that, Telkom Indonesia is 1.07 times more volatile than VOXX International. It trades about -0.04 of its total potential returns per unit of risk. VOXX International is currently generating about 0.14 per unit of volatility. If you would invest  530.00  in VOXX International on September 26, 2024 and sell it today you would earn a total of  200.00  from holding VOXX International or generate 37.74% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  VOXX International

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 uncertain 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.

VOXX International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VOXX International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VOXX International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and VOXX International

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

The idea behind Telkom Indonesia Tbk and VOXX International 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.