Correlation Between Telkom Indonesia and USWE SPORTS

Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and USWE SPORTS 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 USWE SPORTS 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 USWE SPORTS AB, you can compare the effects of market volatilities on Telkom Indonesia and USWE SPORTS 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 USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and USWE SPORTS.

Diversification Opportunities for Telkom Indonesia and USWE SPORTS

-0.77

Correlation Coefficient

Telkom Indonesia  USWE SPORTS

Pay attention - limited upside

The 3 months correlation between Telkom and USWE is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB 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 USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and USWE SPORTS go up and down completely randomly.

Pair Corralation between Telkom Indonesia and USWE SPORTS

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 0.79 times more return on investment than USWE SPORTS. However, Telkom Indonesia Tbk is 1.26 times less risky than USWE SPORTS. It trades about -0.01 of its potential returns per unit of risk. USWE SPORTS AB is currently generating about -0.02 per unit of risk. If you would invest  21.00  in Telkom Indonesia Tbk on October 21, 2024 and sell it today you would lose (7.00) from holding Telkom Indonesia Tbk or give up 33.33% of portfolio value over 90 days.

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

Telkom Indonesia Tbk  vs.  USWE SPORTS AB

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

USWE SPORTS AB

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USWE SPORTS AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, USWE SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and USWE SPORTS

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

The idea behind Telkom Indonesia Tbk and USWE SPORTS AB 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.