Correlation Between Telkom Indonesia and China Minsh

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

Diversification Opportunities for Telkom Indonesia and China Minsh

-0.34

Correlation Coefficient

Telkom Indonesia  China Minsh

Very good diversification

The 3 months correlation between Telkom and China is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and China Minsh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Minsh 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 China Minsh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Minsh has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and China Minsh go up and down completely randomly.

Pair Corralation between Telkom Indonesia and China Minsh

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the China Minsh. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 5.08 times less risky than China Minsh. The stock trades about -0.04 of its potential returns per unit of risk. The China Minsh is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  334.00  in China Minsh on September 26, 2024 and sell it today you would earn a total of  64.00  from holding China Minsh or generate 19.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.08%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  China Minsh

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.

China Minsh

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Minsh are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward-looking signals, China Minsh may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Telkom Indonesia and China Minsh

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

The idea behind Telkom Indonesia Tbk and China Minsh 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.