Correlation Between TIME Dotcom and Telekom Malaysia

Can any of the company-specific risk be diversified away by investing in both TIME Dotcom and Telekom Malaysia 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 TIME Dotcom and Telekom Malaysia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TIME Dotcom Bhd and Telekom Malaysia Bhd, you can compare the effects of market volatilities on TIME Dotcom and Telekom Malaysia 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 TIME Dotcom with a short position of Telekom Malaysia. Check out your portfolio center. Please also check ongoing floating volatility patterns of TIME Dotcom and Telekom Malaysia.

Diversification Opportunities for TIME Dotcom and Telekom Malaysia

-0.25

Correlation Coefficient

TIME Dotcom  Telekom Malaysia

Very good diversification

The 3 months correlation between TIME and Telekom is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding TIME Dotcom Bhd and Telekom Malaysia Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telekom Malaysia Bhd and TIME Dotcom 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 TIME Dotcom Bhd are associated (or correlated) with Telekom Malaysia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telekom Malaysia Bhd has no effect on the direction of TIME Dotcom i.e., TIME Dotcom and Telekom Malaysia go up and down completely randomly.

Pair Corralation between TIME Dotcom and Telekom Malaysia

Assuming the 90 days trading horizon TIME Dotcom is expected to generate 2.16 times less return on investment than Telekom Malaysia. But when comparing it to its historical volatility, TIME Dotcom Bhd is 1.05 times less risky than Telekom Malaysia. It trades about 0.03 of its potential returns per unit of risk. Telekom Malaysia Bhd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  483.00  in Telekom Malaysia Bhd on September 28, 2024 and sell it today you would earn a total of  189.00  from holding Telekom Malaysia Bhd or generate 39.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

TIME Dotcom Bhd  vs.  Telekom Malaysia Bhd

TIME Dotcom Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TIME Dotcom Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, TIME Dotcom is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Telekom Malaysia Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telekom Malaysia Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Telekom Malaysia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with TIME Dotcom and Telekom Malaysia

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

The idea behind TIME Dotcom Bhd and Telekom Malaysia Bhd 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.