Correlation Between Telkom Indonesia and StateHouse Holdings

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

Diversification Opportunities for Telkom Indonesia and StateHouse Holdings

-0.36

Correlation Coefficient

Telkom Indonesia  StateHouse Holdings

Very good diversification

The 3 months correlation between Telkom and StateHouse is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and StateHouse Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StateHouse Holdings 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 StateHouse Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StateHouse Holdings has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and StateHouse Holdings go up and down completely randomly.

Pair Corralation between Telkom Indonesia and StateHouse Holdings

Assuming the 90 days horizon Telkom Indonesia is expected to generate 6.28 times less return on investment than StateHouse Holdings. But when comparing it to its historical volatility, Telkom Indonesia Tbk is 2.27 times less risky than StateHouse Holdings. It trades about 0.02 of its potential returns per unit of risk. StateHouse Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1.50  in StateHouse Holdings on September 18, 2024 and sell it today you would earn a total of  0.00  from holding StateHouse Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  StateHouse Holdings

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.

StateHouse Holdings

Risk-Adjusted Performance

4 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in StateHouse Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, StateHouse Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and StateHouse Holdings

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

The idea behind Telkom Indonesia Tbk and StateHouse Holdings 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.