Correlation Between Tecsys and Telkom Indonesia

Can any of the company-specific risk be diversified away by investing in both Tecsys and Telkom Indonesia 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 Tecsys and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tecsys Inc and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Tecsys and Telkom Indonesia 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 Tecsys with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tecsys and Telkom Indonesia.

Diversification Opportunities for Tecsys and Telkom Indonesia

0.57

Correlation Coefficient

Tecsys  Telkom Indonesia

Very weak diversification

The 3 months correlation between Tecsys and Telkom is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Tecsys Inc and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk and Tecsys 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 Tecsys Inc are associated (or correlated) with Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of Tecsys i.e., Tecsys and Telkom Indonesia go up and down completely randomly.

Pair Corralation between Tecsys and Telkom Indonesia

Assuming the 90 days horizon Tecsys Inc is expected to under-perform the Telkom Indonesia. But the pink sheet apears to be less risky and, when comparing its historical volatility, Tecsys Inc is 1.31 times less risky than Telkom Indonesia. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Telkom Indonesia Tbk is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,568  in Telkom Indonesia Tbk on December 20, 2024 and sell it today you would lose (133.00) from holding Telkom Indonesia Tbk or give up 8.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Tecsys Inc  vs.  Telkom Indonesia Tbk

Tecsys Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tecsys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Tecsys and Telkom Indonesia

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

The idea behind Tecsys Inc and Telkom Indonesia Tbk 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.