Correlation Between Telkom Indonesia and Peer To

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

Diversification Opportunities for Telkom Indonesia and Peer To

-0.37

Correlation Coefficient

Telkom Indonesia  Peer To

Very good diversification

The 3 months correlation between Telkom and Peer is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Peer To Peer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peer To Peer 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 Peer To. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peer To Peer has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Peer To go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Peer To

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Peer To. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 12.94 times less risky than Peer To. The stock trades about -0.15 of its potential returns per unit of risk. The Peer To Peer is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Peer To Peer on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Peer To Peer or generate 0.0% 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.  Peer To Peer

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. Despite uncertain performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Peer To Peer

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Peer To Peer are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Peer To reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and Peer To

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

The idea behind Telkom Indonesia Tbk and Peer To Peer 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.