Correlation Between CNVISION MEDIA and Telkom Indonesia

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

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

Diversification Opportunities for CNVISION MEDIA and Telkom Indonesia

-0.48

Correlation Coefficient

CNVISION MEDIA  Telkom Indonesia

Very good diversification

The 3 months correlation between CNVISION and Telkom is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding CNVISION MEDIA 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 CNVISION MEDIA 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 CNVISION MEDIA 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 CNVISION MEDIA i.e., CNVISION MEDIA and Telkom Indonesia go up and down completely randomly.

Pair Corralation between CNVISION MEDIA and Telkom Indonesia

Assuming the 90 days trading horizon CNVISION MEDIA is expected to generate 0.67 times more return on investment than Telkom Indonesia. However, CNVISION MEDIA is 1.5 times less risky than Telkom Indonesia. It trades about 0.11 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.07 per unit of risk. If you would invest  5.25  in CNVISION MEDIA on October 22, 2024 and sell it today you would earn a total of  0.80  from holding CNVISION MEDIA or generate 15.24% return on investment over 90 days.

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

CNVISION MEDIA  vs.  Telkom Indonesia Tbk

CNVISION MEDIA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CNVISION MEDIA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CNVISION MEDIA exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CNVISION MEDIA and Telkom Indonesia

The main advantage of trading using opposite CNVISION MEDIA and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNVISION MEDIA 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 CNVISION MEDIA 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .