Correlation Between AALBERTS IND and Telkom Indonesia

Can any of the company-specific risk be diversified away by investing in both AALBERTS IND and Telkom Indonesia 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 AALBERTS IND and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AALBERTS IND and Telkom Indonesia Tbk, you can compare the effects of market volatilities on AALBERTS IND and Telkom Indonesia 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 AALBERTS IND with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of AALBERTS IND and Telkom Indonesia.

Diversification Opportunities for AALBERTS IND and Telkom Indonesia

0.01

Correlation Coefficient

AALBERTS IND  Telkom Indonesia

Significant diversification

The 3 months correlation between AALBERTS and Telkom is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding AALBERTS IND and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk and AALBERTS IND 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 AALBERTS IND are associated (or correlated) with Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of AALBERTS IND i.e., AALBERTS IND and Telkom Indonesia go up and down completely randomly.

Pair Corralation between AALBERTS IND and Telkom Indonesia

Assuming the 90 days trading horizon AALBERTS IND is expected to generate 0.32 times more return on investment than Telkom Indonesia. However, AALBERTS IND is 3.12 times less risky than Telkom Indonesia. It trades about -0.04 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.02 per unit of risk. If you would invest  3,974  in AALBERTS IND on October 22, 2024 and sell it today you would lose (598.00) from holding AALBERTS IND or give up 15.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.56%
Values	Daily Returns

AALBERTS IND  vs.  Telkom Indonesia Tbk

AALBERTS IND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AALBERTS IND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AALBERTS IND is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with AALBERTS IND and Telkom Indonesia

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

The idea behind AALBERTS IND and Telkom Indonesia 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.