Correlation Between Telkom Indonesia and Captiva Verde

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

Diversification Opportunities for Telkom Indonesia and Captiva Verde

0.69

Correlation Coefficient

Telkom Indonesia  Captiva Verde

Poor diversification

The 3 months correlation between Telkom and Captiva is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Captiva Verde Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Captiva Verde Land 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 Captiva Verde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Captiva Verde Land has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Captiva Verde go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Captiva Verde

Considering the 90-day investment horizon Telkom Indonesia is expected to generate 111.98 times less return on investment than Captiva Verde. But when comparing it to its historical volatility, Telkom Indonesia Tbk is 25.73 times less risky than Captiva Verde. It trades about 0.04 of its potential returns per unit of risk. Captiva Verde Land is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Captiva Verde Land on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Captiva Verde Land or generate 0.0% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  Captiva Verde Land

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 uncertain 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.

Captiva Verde Land

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Captiva Verde Land are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Captiva Verde reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and Captiva Verde

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

The idea behind Telkom Indonesia Tbk and Captiva Verde Land 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.