Correlation Between Telkom Indonesia and Everspin Technologies

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

Diversification Opportunities for Telkom Indonesia and Everspin Technologies

-0.34

Correlation Coefficient

Telkom Indonesia  Everspin Technologies

Very good diversification

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

Pair Corralation between Telkom Indonesia and Everspin Technologies

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Everspin Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 2.39 times less risky than Everspin Technologies. The stock trades about -0.07 of its potential returns per unit of risk. The Everspin Technologies is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  478.00  in Everspin Technologies on September 13, 2024 and sell it today you would earn a total of  137.00  from holding Everspin Technologies or generate 28.66% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  Everspin Technologies

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 comparatively stable basic indicators, Telkom Indonesia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Everspin Technologies

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Telkom Indonesia and Everspin Technologies

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

The idea behind Telkom Indonesia Tbk and Everspin Technologies 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 Global Correlations module to find global opportunities by holding instruments from different markets.