Correlation Between Telkom Indonesia and PHENIXFIN

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

Diversification Opportunities for Telkom Indonesia and PHENIXFIN

-0.48

Correlation Coefficient

Telkom Indonesia  PHENIXFIN

Very good diversification

The 3 months correlation between Telkom and PHENIXFIN is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and PHENIXFIN P DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHENIXFIN P DL 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 PHENIXFIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHENIXFIN P DL has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and PHENIXFIN go up and down completely randomly.

Pair Corralation between Telkom Indonesia and PHENIXFIN

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 5.83 times more return on investment than PHENIXFIN. However, Telkom Indonesia is 5.83 times more volatile than PHENIXFIN P DL. It trades about 0.03 of its potential returns per unit of risk. PHENIXFIN P DL is currently generating about 0.16 per unit of risk. If you would invest  18.00  in Telkom Indonesia Tbk on September 28, 2024 and sell it today you would lose (1.00) from holding Telkom Indonesia Tbk or give up 5.56% of portfolio value over 90 days.

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

Telkom Indonesia Tbk  vs.  PHENIXFIN P DL

Telkom Indonesia Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Telkom Indonesia Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Telkom Indonesia reported solid returns over the last few months and may actually be approaching a breakup point.

PHENIXFIN P DL

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PHENIXFIN P DL are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, PHENIXFIN reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and PHENIXFIN

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

The idea behind Telkom Indonesia Tbk and PHENIXFIN P DL 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.