Correlation Between Telkom Indonesia and BlackRock Investment

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

Diversification Opportunities for Telkom Indonesia and BlackRock Investment

0.84

Correlation Coefficient

Telkom Indonesia  BlackRock Investment

Very poor diversification

The 3 months correlation between Telkom and BlackRock is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and BlackRock Investment Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Investment 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 BlackRock Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Investment has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and BlackRock Investment go up and down completely randomly.

Pair Corralation between Telkom Indonesia and BlackRock Investment

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the BlackRock Investment. In addition to that, Telkom Indonesia is 2.4 times more volatile than BlackRock Investment Quality. It trades about -0.04 of its total potential returns per unit of risk. BlackRock Investment Quality is currently generating about -0.03 per unit of volatility. If you would invest  1,161  in BlackRock Investment Quality on October 4, 2024 and sell it today you would lose (35.00) from holding BlackRock Investment Quality or give up 3.01% of portfolio value over 90 days.

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

Telkom Indonesia Tbk  vs.  BlackRock Investment Quality

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 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.

BlackRock Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Investment Quality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Telkom Indonesia and BlackRock Investment

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

The idea behind Telkom Indonesia Tbk and BlackRock Investment Quality 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.