Correlation Between DATA MODUL and Telkom Indonesia

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

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

Diversification Opportunities for DATA MODUL and Telkom Indonesia

0.14

Correlation Coefficient

DATA MODUL  Telkom Indonesia

Average diversification

The 3 months correlation between DATA and Telkom is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding DATA MODUL 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 DATA MODUL 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 DATA MODUL 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 DATA MODUL i.e., DATA MODUL and Telkom Indonesia go up and down completely randomly.

Pair Corralation between DATA MODUL and Telkom Indonesia

Assuming the 90 days trading horizon DATA MODUL is expected to generate 0.54 times more return on investment than Telkom Indonesia. However, DATA MODUL is 1.86 times less risky than Telkom Indonesia. It trades about -0.08 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.04 per unit of risk. If you would invest  2,860  in DATA MODUL on October 23, 2024 and sell it today you would lose (280.00) from holding DATA MODUL or give up 9.79% of portfolio value over 90 days.

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

DATA MODUL   vs.  Telkom Indonesia Tbk

DATA MODUL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATA MODUL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm 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 latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with DATA MODUL and Telkom Indonesia

The main advantage of trading using opposite DATA MODUL and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATA MODUL 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 DATA MODUL 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.