Correlation Between Telkom Indonesia and Leyand International

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

Diversification Opportunities for Telkom Indonesia and Leyand International

0.78

Correlation Coefficient

Telkom Indonesia  Leyand International

Poor diversification

The 3 months correlation between Telkom and Leyand is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Leyand International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leyand International Tbk 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 Leyand International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leyand International Tbk has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Leyand International go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Leyand International

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 0.33 times more return on investment than Leyand International. However, Telkom Indonesia Tbk is 3.07 times less risky than Leyand International. It trades about -0.08 of its potential returns per unit of risk. Leyand International Tbk is currently generating about -0.09 per unit of risk. If you would invest  309,000  in Telkom Indonesia Tbk on September 16, 2024 and sell it today you would lose (33,000) from holding Telkom Indonesia Tbk or give up 10.68% of portfolio value over 90 days.

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

Telkom Indonesia Tbk  vs.  Leyand International Tbk

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Leyand International Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leyand International Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals 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.

Pair Trading with Telkom Indonesia and Leyand International

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

The idea behind Telkom Indonesia Tbk and Leyand International Tbk 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.