Correlation Between PT Indosat and COMSovereign Holding

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

Diversification Opportunities for PT Indosat and COMSovereign Holding

0.38

Correlation Coefficient

PT Indosat  COMSovereign Holding

Weak diversification

The 3 months correlation between PTITF and COMSovereign is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding PT Indosat Tbk and COMSovereign Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMSovereign Holding Corp 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 COMSovereign Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMSovereign Holding Corp has no effect on the direction of PT Indosat i.e., PT Indosat and COMSovereign Holding go up and down completely randomly.

Pair Corralation between PT Indosat and COMSovereign Holding

Assuming the 90 days horizon PT Indosat Tbk is expected to generate 16.97 times more return on investment than COMSovereign Holding. However, PT Indosat is 16.97 times more volatile than COMSovereign Holding Corp. It trades about 0.17 of its potential returns per unit of risk. COMSovereign Holding Corp is currently generating about -0.01 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	Very Weak
Accuracy	36.84%
Values	Daily Returns

PT Indosat Tbk  vs.  COMSovereign Holding Corp

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.

COMSovereign Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMSovereign Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, COMSovereign Holding is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Indosat and COMSovereign Holding

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

The idea behind PT Indosat Tbk and COMSovereign Holding Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.