Correlation Between Casio Computer and Telkom Indonesia

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

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

Diversification Opportunities for Casio Computer and Telkom Indonesia

-0.02

Correlation Coefficient

Casio Computer  Telkom Indonesia

Good diversification

The 3 months correlation between Casio and Telkom is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd 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 Casio Computer 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 Casio Computer CoLtd 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 Casio Computer i.e., Casio Computer and Telkom Indonesia go up and down completely randomly.

Pair Corralation between Casio Computer and Telkom Indonesia

Assuming the 90 days trading horizon Casio Computer CoLtd is expected to generate 0.39 times more return on investment than Telkom Indonesia. However, Casio Computer CoLtd is 2.58 times less risky than Telkom Indonesia. It trades about 0.01 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about 0.0 per unit of risk. If you would invest  785.00  in Casio Computer CoLtd on October 4, 2024 and sell it today you would earn a total of  6.00  from holding Casio Computer CoLtd or generate 0.76% return on investment over 90 days.

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

Casio Computer CoLtd  vs.  Telkom Indonesia Tbk

Casio Computer CoLtd

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Casio Computer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Telkom Indonesia Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Telkom Indonesia Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Telkom Indonesia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Casio Computer and Telkom Indonesia

The main advantage of trading using opposite Casio Computer and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casio Computer 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 Casio Computer CoLtd 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.