Correlation Between PT Indosat and NTT Data

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

Diversification Opportunities for PT Indosat and NTT Data

0.12

Correlation Coefficient

PT Indosat  NTT Data

Average diversification

The 3 months correlation between PTITF and NTT is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding PT Indosat Tbk and NTT Data Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTT Data 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 NTT Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTT Data Corp has no effect on the direction of PT Indosat i.e., PT Indosat and NTT Data go up and down completely randomly.

Pair Corralation between PT Indosat and NTT Data

Assuming the 90 days horizon PT Indosat Tbk is expected to under-perform the NTT Data. In addition to that, PT Indosat is 2.4 times more volatile than NTT Data Corp. It trades about -0.2 of its total potential returns per unit of risk. NTT Data Corp is currently generating about -0.03 per unit of volatility. If you would invest  1,910  in NTT Data Corp on December 26, 2024 and sell it today you would lose (81.00) from holding NTT Data Corp or give up 4.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

PT Indosat Tbk  vs.  NTT Data Corp

PT Indosat Tbk

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

NTT Data Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days NTT Data Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, NTT Data is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PT Indosat and NTT Data

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

The idea behind PT Indosat Tbk and NTT Data 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.