Correlation Between Telkom Indonesia and MITSUI FUDOSAN

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

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

Diversification Opportunities for Telkom Indonesia and MITSUI FUDOSAN

0.71

Correlation Coefficient

Telkom Indonesia  MITSUI FUDOSAN

Poor diversification

The 3 months correlation between Telkom and MITSUI is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and MITSUI FUDOSAN LOGPARK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITSUI FUDOSAN LOGPARK and Telkom Indonesia 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 Telkom Indonesia Tbk are associated (or correlated) with MITSUI FUDOSAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITSUI FUDOSAN LOGPARK has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and MITSUI FUDOSAN go up and down completely randomly.

Pair Corralation between Telkom Indonesia and MITSUI FUDOSAN

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the MITSUI FUDOSAN. In addition to that, Telkom Indonesia is 3.13 times more volatile than MITSUI FUDOSAN LOGPARK. It trades about -0.06 of its total potential returns per unit of risk. MITSUI FUDOSAN LOGPARK is currently generating about -0.12 per unit of volatility. If you would invest  60,500  in MITSUI FUDOSAN LOGPARK on September 22, 2024 and sell it today you would lose (2,000) from holding MITSUI FUDOSAN LOGPARK or give up 3.31% of portfolio value over 90 days.

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

Telkom Indonesia Tbk  vs.  MITSUI FUDOSAN LOGPARK

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. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

MITSUI FUDOSAN LOGPARK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MITSUI FUDOSAN LOGPARK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Telkom Indonesia and MITSUI FUDOSAN

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

The idea behind Telkom Indonesia Tbk and MITSUI FUDOSAN LOGPARK 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.