Correlation Between Telkom Indonesia and AEON MALL

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

Diversification Opportunities for Telkom Indonesia and AEON MALL

0.61

Correlation Coefficient

Telkom Indonesia  AEON MALL

Poor diversification

The 3 months correlation between Telkom and AEON is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and AEON MALL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON MALL LTD 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 AEON MALL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON MALL LTD has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and AEON MALL go up and down completely randomly.

Pair Corralation between Telkom Indonesia and AEON MALL

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the AEON MALL. In addition to that, Telkom Indonesia is 4.63 times more volatile than AEON MALL LTD. It trades about -0.02 of its total potential returns per unit of risk. AEON MALL LTD is currently generating about 0.02 per unit of volatility. If you would invest  1,260  in AEON MALL LTD on September 4, 2024 and sell it today you would earn a total of  10.00  from holding AEON MALL LTD or generate 0.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  AEON MALL LTD

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. Despite latest uncertain performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AEON MALL LTD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AEON MALL LTD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AEON MALL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Telkom Indonesia and AEON MALL

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

The idea behind Telkom Indonesia Tbk and AEON MALL LTD 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.