Correlation Between Telkom Indonesia and Cibl

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

Diversification Opportunities for Telkom Indonesia and Cibl

0.24

Correlation Coefficient

Telkom Indonesia  Cibl

Modest diversification

The 3 months correlation between Telkom and Cibl is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Cibl Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cibl Inc 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 Cibl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cibl Inc has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Cibl go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Cibl

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Cibl. In addition to that, Telkom Indonesia is 1.42 times more volatile than Cibl Inc. It trades about -0.09 of its total potential returns per unit of risk. Cibl Inc is currently generating about 0.05 per unit of volatility. If you would invest  174,975  in Cibl Inc on December 24, 2024 and sell it today you would earn a total of  7,380  from holding Cibl Inc or generate 4.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Cibl Inc

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

Cibl Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cibl Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, Cibl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Telkom Indonesia and Cibl

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

The idea behind Telkom Indonesia Tbk and Cibl Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.