Correlation Between Telkom Indonesia and Greater Cannabis

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

Diversification Opportunities for Telkom Indonesia and Greater Cannabis

-0.4

Correlation Coefficient

Telkom Indonesia  Greater Cannabis

Very good diversification

The 3 months correlation between Telkom and Greater is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Greater Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greater Cannabis 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 Greater Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greater Cannabis has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Greater Cannabis go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Greater Cannabis

Assuming the 90 days horizon Telkom Indonesia Tbk is expected to generate 0.3 times more return on investment than Greater Cannabis. However, Telkom Indonesia Tbk is 3.36 times less risky than Greater Cannabis. It trades about 0.02 of its potential returns per unit of risk. Greater Cannabis is currently generating about 0.0 per unit of risk. If you would invest  16.00  in Telkom Indonesia Tbk on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Telkom Indonesia Tbk or generate 0.0% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  Greater Cannabis

Telkom Indonesia Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Telkom Indonesia Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Telkom Indonesia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Greater Cannabis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greater Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Greater Cannabis is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Telkom Indonesia and Greater Cannabis

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

The idea behind Telkom Indonesia Tbk and Greater Cannabis 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.