Correlation Between PT Indosat and ATN International

Can any of the company-specific risk be diversified away by investing in both PT Indosat and ATN International 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 PT Indosat and ATN International into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for PT Indosat and ATN International

0.57

Correlation Coefficient

PT Indosat  ATN International

Very weak diversification

The 3 months correlation between PTITF and ATN is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding PT Indosat Tbk and ATN International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATN International and PT Indosat 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 PT Indosat Tbk are associated (or correlated) with ATN International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATN International has no effect on the direction of PT Indosat i.e., PT Indosat and ATN International go up and down completely randomly.

Pair Corralation between PT Indosat and ATN International

Assuming the 90 days horizon PT Indosat Tbk is expected to generate 22.43 times more return on investment than ATN International. However, PT Indosat is 22.43 times more volatile than ATN International. It trades about 0.17 of its potential returns per unit of risk. ATN International is currently generating about -0.03 per unit of risk. If you would invest  49.00  in PT Indosat Tbk on October 5, 2024 and sell it today you would lose (33.00) from holding PT Indosat Tbk or give up 67.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	54.29%
Values	Daily Returns

PT Indosat Tbk  vs.  ATN International

PT Indosat Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indosat Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ATN International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATN International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with PT Indosat and ATN International

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

The idea behind PT Indosat Tbk and ATN International 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.