Correlation Between Shenandoah Telecommunicatio and PT Indosat

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

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

Diversification Opportunities for Shenandoah Telecommunicatio and PT Indosat

0.3

Correlation Coefficient

Shenandoah Telecommunicatio  PT Indosat

Weak diversification

The 3 months correlation between Shenandoah and PTITF is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and PT Indosat Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indosat Tbk and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications Co are associated (or correlated) with PT Indosat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indosat Tbk has no effect on the direction of Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and PT Indosat go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and PT Indosat

Given the investment horizon of 90 days Shenandoah Telecommunications Co is expected to generate 0.14 times more return on investment than PT Indosat. However, Shenandoah Telecommunications Co is 7.28 times less risky than PT Indosat. It trades about -0.15 of its potential returns per unit of risk. PT Indosat Tbk is currently generating about -0.26 per unit of risk. If you would invest  1,333  in Shenandoah Telecommunications Co on September 29, 2024 and sell it today you would lose (89.00) from holding Shenandoah Telecommunications Co or give up 6.68% of portfolio value over 90 days.

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

Shenandoah Telecommunications   vs.  PT Indosat Tbk

Shenandoah Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenandoah Telecommunications Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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

Pair Trading with Shenandoah Telecommunicatio and PT Indosat

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

The idea behind Shenandoah Telecommunications Co and PT Indosat 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.