Correlation Between Telkom Indonesia and Lenovo Group

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

Diversification Opportunities for Telkom Indonesia and Lenovo Group

0.55

Correlation Coefficient

Telkom Indonesia  Lenovo Group

Very weak diversification

The 3 months correlation between Telkom and Lenovo is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Lenovo Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenovo Group Limited 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 Lenovo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenovo Group Limited has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Lenovo Group go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Lenovo Group

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 2.61 times more return on investment than Lenovo Group. However, Telkom Indonesia is 2.61 times more volatile than Lenovo Group Limited. It trades about 0.01 of its potential returns per unit of risk. Lenovo Group Limited is currently generating about 0.0 per unit of risk. If you would invest  18.00  in Telkom Indonesia Tbk on October 4, 2024 and sell it today you would lose (3.00) from holding Telkom Indonesia Tbk or give up 16.67% of portfolio value over 90 days.

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

Telkom Indonesia Tbk  vs.  Lenovo Group Limited

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 nearly stable forward indicators, Telkom Indonesia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lenovo Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lenovo Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lenovo Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Telkom Indonesia and Lenovo Group

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

The idea behind Telkom Indonesia Tbk and Lenovo Group Limited 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.