Correlation Between Telkom Indonesia and Emera Maine

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

Diversification Opportunities for Telkom Indonesia and Emera Maine

-0.7

Correlation Coefficient

Telkom Indonesia  Emera Maine

Excellent diversification

The 3 months correlation between Telkom and Emera is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Emera Maine PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Maine PFD 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 Emera Maine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emera Maine PFD has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Emera Maine go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Emera Maine

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Emera Maine. In addition to that, Telkom Indonesia is 8.05 times more volatile than Emera Maine PFD. It trades about -0.04 of its total potential returns per unit of risk. Emera Maine PFD is currently generating about 0.1 per unit of volatility. If you would invest  9,650  in Emera Maine PFD on September 27, 2024 and sell it today you would earn a total of  175.00  from holding Emera Maine PFD or generate 1.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	22.43%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Emera Maine PFD

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 weak performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Emera Maine PFD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emera Maine PFD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Emera Maine is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Telkom Indonesia and Emera Maine

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

The idea behind Telkom Indonesia Tbk and Emera Maine PFD 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.