Correlation Between Telkom Indonesia and WonderFi Technologies

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

Diversification Opportunities for Telkom Indonesia and WonderFi Technologies

-0.69

Correlation Coefficient

Telkom Indonesia  WonderFi Technologies

Excellent diversification

The 3 months correlation between Telkom and WonderFi is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and WonderFi Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WonderFi 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 WonderFi Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WonderFi Technologies has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and WonderFi Technologies go up and down completely randomly.

Pair Corralation between Telkom Indonesia and WonderFi Technologies

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the WonderFi Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 4.28 times less risky than WonderFi Technologies. The stock trades about -0.12 of its potential returns per unit of risk. The WonderFi Technologies is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  10.00  in WonderFi Technologies on September 2, 2024 and sell it today you would earn a total of  7.00  from holding WonderFi Technologies or generate 70.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  WonderFi 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. 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.

WonderFi Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WonderFi Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, WonderFi Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and WonderFi Technologies

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

The idea behind Telkom Indonesia Tbk and WonderFi 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.