Correlation Between Telkom Indonesia and NEWFOUNDLAND DISCOVCORP

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

Diversification Opportunities for Telkom Indonesia and NEWFOUNDLAND DISCOVCORP

-0.38

Correlation Coefficient

Telkom Indonesia  NEWFOUNDLAND DISCOVCORP

Very good diversification

The 3 months correlation between Telkom and NEWFOUNDLAND is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and NEWFOUNDLAND DISCOVCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWFOUNDLAND DISCOVCORP 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 NEWFOUNDLAND DISCOVCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWFOUNDLAND DISCOVCORP has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and NEWFOUNDLAND DISCOVCORP go up and down completely randomly.

Pair Corralation between Telkom Indonesia and NEWFOUNDLAND DISCOVCORP

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the NEWFOUNDLAND DISCOVCORP. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 23.64 times less risky than NEWFOUNDLAND DISCOVCORP. The stock trades about -0.01 of its potential returns per unit of risk. The NEWFOUNDLAND DISCOVCORP is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  20.00  in NEWFOUNDLAND DISCOVCORP on September 26, 2024 and sell it today you would lose (16.30) from holding NEWFOUNDLAND DISCOVCORP or give up 81.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  NEWFOUNDLAND DISCOVCORP

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 uncertain 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.

NEWFOUNDLAND DISCOVCORP

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with Telkom Indonesia and NEWFOUNDLAND DISCOVCORP

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

The idea behind Telkom Indonesia Tbk and NEWFOUNDLAND DISCOVCORP 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.