Correlation Between Smartfren Telecom and Citatah Tbk

Can any of the company-specific risk be diversified away by investing in both Smartfren Telecom and Citatah Tbk 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 Citatah Tbk 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 Citatah Tbk, you can compare the effects of market volatilities on Smartfren Telecom and Citatah Tbk 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 Citatah Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smartfren Telecom and Citatah Tbk.

Diversification Opportunities for Smartfren Telecom and Citatah Tbk

0.01

Correlation Coefficient

Smartfren Telecom  Citatah Tbk

Significant diversification

The 3 months correlation between Smartfren and Citatah is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Smartfren Telecom Tbk and Citatah Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citatah Tbk 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 Citatah Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citatah Tbk has no effect on the direction of Smartfren Telecom i.e., Smartfren Telecom and Citatah Tbk go up and down completely randomly.

Pair Corralation between Smartfren Telecom and Citatah Tbk

Assuming the 90 days trading horizon Smartfren Telecom Tbk is expected to generate 1.33 times more return on investment than Citatah Tbk. However, Smartfren Telecom is 1.33 times more volatile than Citatah Tbk. It trades about 0.06 of its potential returns per unit of risk. Citatah Tbk is currently generating about 0.04 per unit of risk. If you would invest  2,200  in Smartfren Telecom Tbk on December 29, 2024 and sell it today you would earn a total of  200.00  from holding Smartfren Telecom Tbk or generate 9.09% return on investment over 90 days.

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

Smartfren Telecom Tbk  vs.  Citatah Tbk

Smartfren Telecom Tbk

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Smartfren Telecom Tbk are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Smartfren Telecom may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Citatah Tbk

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citatah Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Citatah Tbk is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Smartfren Telecom and Citatah Tbk

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

The idea behind Smartfren Telecom Tbk and Citatah 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.