Correlation Between Charter Communications and Telkom Indonesia

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

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

Diversification Opportunities for Charter Communications and Telkom Indonesia

0.23

Correlation Coefficient

Charter Communications  Telkom Indonesia

Modest diversification

The 3 months correlation between Charter and Telkom is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications 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 Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Telkom Indonesia go up and down completely randomly.

Pair Corralation between Charter Communications and Telkom Indonesia

Given the investment horizon of 90 days Charter Communications is expected to generate 0.7 times more return on investment than Telkom Indonesia. However, Charter Communications is 1.43 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 -0.03 per unit of risk. If you would invest  33,600  in Charter Communications on October 25, 2024 and sell it today you would earn a total of  1,680  from holding Charter Communications or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Charter Communications  vs.  Telkom Indonesia Tbk

Charter Communications

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Charter Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Charter Communications and Telkom Indonesia

The main advantage of trading using opposite Charter Communications and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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 Charter Communications 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..