Correlation Between Telkom Indonesia and CNVISION MEDIA

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

Diversification Opportunities for Telkom Indonesia and CNVISION MEDIA

-0.13

Correlation Coefficient

Telkom Indonesia  CNVISION MEDIA

Good diversification

The 3 months correlation between Telkom and CNVISION is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and CNVISION MEDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNVISION MEDIA 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 CNVISION MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNVISION MEDIA has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and CNVISION MEDIA go up and down completely randomly.

Pair Corralation between Telkom Indonesia and CNVISION MEDIA

Assuming the 90 days trading horizon Telkom Indonesia is expected to generate 6.72 times less return on investment than CNVISION MEDIA. In addition to that, Telkom Indonesia is 1.6 times more volatile than CNVISION MEDIA. It trades about 0.02 of its total potential returns per unit of risk. CNVISION MEDIA is currently generating about 0.24 per unit of volatility. If you would invest  4.95  in CNVISION MEDIA on October 6, 2024 and sell it today you would earn a total of  0.60  from holding CNVISION MEDIA or generate 12.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  CNVISION MEDIA

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 rather sound technical and fundamental indicators, Telkom Indonesia is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

CNVISION MEDIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNVISION MEDIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Telkom Indonesia and CNVISION MEDIA

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

The idea behind Telkom Indonesia Tbk and CNVISION MEDIA 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.