Correlation Between QCR Holdings and Telkom Indonesia

Can any of the company-specific risk be diversified away by investing in both QCR Holdings and Telkom Indonesia 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 QCR Holdings and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for QCR Holdings and Telkom Indonesia

-0.86

Correlation Coefficient

QCR Holdings  Telkom Indonesia

Pay attention - limited upside

The 3 months correlation between QCR and Telkom is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding QCR Holdings and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk and QCR Holdings 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 QCR Holdings are associated (or correlated) with Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of QCR Holdings i.e., QCR Holdings and Telkom Indonesia go up and down completely randomly.

Pair Corralation between QCR Holdings and Telkom Indonesia

Given the investment horizon of 90 days QCR Holdings is expected to generate 1.35 times more return on investment than Telkom Indonesia. However, QCR Holdings is 1.35 times more volatile than Telkom Indonesia Tbk. It trades about 0.14 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.12 per unit of risk. If you would invest  7,659  in QCR Holdings on September 3, 2024 and sell it today you would earn a total of  1,552  from holding QCR Holdings or generate 20.26% return on investment over 90 days.

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

QCR Holdings  vs.  Telkom Indonesia Tbk

QCR Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QCR Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, QCR Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Telkom Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telkom Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with QCR Holdings and Telkom Indonesia

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

The idea behind QCR Holdings and Telkom Indonesia 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.