Correlation Between Smartfren Telecom and Ashmore Asset

Can any of the company-specific risk be diversified away by investing in both Smartfren Telecom and Ashmore Asset 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 Smartfren Telecom and Ashmore Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Smartfren Telecom Tbk and Ashmore Asset Management, you can compare the effects of market volatilities on Smartfren Telecom and Ashmore Asset 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 Smartfren Telecom with a short position of Ashmore Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smartfren Telecom and Ashmore Asset.

Diversification Opportunities for Smartfren Telecom and Ashmore Asset

-0.22

Correlation Coefficient

Smartfren Telecom  Ashmore Asset

Very good diversification

The 3 months correlation between Smartfren and Ashmore is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Smartfren Telecom Tbk and Ashmore Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Asset Management and Smartfren Telecom 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 Smartfren Telecom Tbk are associated (or correlated) with Ashmore Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Asset Management has no effect on the direction of Smartfren Telecom i.e., Smartfren Telecom and Ashmore Asset go up and down completely randomly.

Pair Corralation between Smartfren Telecom and Ashmore Asset

Assuming the 90 days trading horizon Smartfren Telecom Tbk is expected to under-perform the Ashmore Asset. But the stock apears to be less risky and, when comparing its historical volatility, Smartfren Telecom Tbk is 1.16 times less risky than Ashmore Asset. The stock trades about -0.08 of its potential returns per unit of risk. The Ashmore Asset Management is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  64,689  in Ashmore Asset Management on September 1, 2024 and sell it today you would earn a total of  5,311  from holding Ashmore Asset Management or generate 8.21% return on investment over 90 days.

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

Smartfren Telecom Tbk  vs.  Ashmore Asset Management

Smartfren Telecom Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smartfren Telecom Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ashmore Asset Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ashmore Asset Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Ashmore Asset disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smartfren Telecom and Ashmore Asset

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

The idea behind Smartfren Telecom Tbk and Ashmore Asset Management 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..