Correlation Between Telkom Indonesia and AXWAY SOFTWARE

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

Diversification Opportunities for Telkom Indonesia and AXWAY SOFTWARE

-0.74

Correlation Coefficient

Telkom Indonesia  AXWAY SOFTWARE

Pay attention - limited upside

The 3 months correlation between Telkom and AXWAY is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and AXWAY SOFTWARE EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXWAY SOFTWARE EO 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 AXWAY SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXWAY SOFTWARE EO has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and AXWAY SOFTWARE go up and down completely randomly.

Pair Corralation between Telkom Indonesia and AXWAY SOFTWARE

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the AXWAY SOFTWARE. In addition to that, Telkom Indonesia is 3.93 times more volatile than AXWAY SOFTWARE EO. It trades about -0.03 of its total potential returns per unit of risk. AXWAY SOFTWARE EO is currently generating about 0.21 per unit of volatility. If you would invest  2,270  in AXWAY SOFTWARE EO on September 3, 2024 and sell it today you would earn a total of  430.00  from holding AXWAY SOFTWARE EO or generate 18.94% 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.  AXWAY SOFTWARE EO

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 basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

AXWAY SOFTWARE EO

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AXWAY SOFTWARE EO are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AXWAY SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and AXWAY SOFTWARE

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

The idea behind Telkom Indonesia Tbk and AXWAY SOFTWARE EO 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.