Correlation Between Telkom Indonesia and PICC Property

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

Diversification Opportunities for Telkom Indonesia and PICC Property

-0.54

Correlation Coefficient

Telkom Indonesia  PICC Property

Excellent diversification

The 3 months correlation between Telkom and PICC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and PICC Property and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICC Property 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 PICC Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICC Property has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and PICC Property go up and down completely randomly.

Pair Corralation between Telkom Indonesia and PICC Property

Assuming the 90 days trading horizon Telkom Indonesia is expected to generate 3.93 times less return on investment than PICC Property. In addition to that, Telkom Indonesia is 4.04 times more volatile than PICC Property and. It trades about 0.01 of its total potential returns per unit of risk. PICC Property and is currently generating about 0.11 per unit of volatility. If you would invest  146.00  in PICC Property and on December 29, 2024 and sell it today you would earn a total of  22.00  from holding PICC Property and or generate 15.07% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  PICC Property and

Telkom Indonesia Tbk

Risk-Adjusted Performance

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

PICC Property

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PICC Property and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PICC Property reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and PICC Property

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

The idea behind Telkom Indonesia Tbk and PICC Property and 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 Anywhere module to track or share privately all of your investments from the convenience of any device.