Correlation Between Telkom Indonesia and Arianne Phosphate

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

Diversification Opportunities for Telkom Indonesia and Arianne Phosphate

-0.17

Correlation Coefficient

Telkom Indonesia  Arianne Phosphate

Good diversification

The 3 months correlation between Telkom and Arianne is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Arianne Phosphate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arianne Phosphate 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 Arianne Phosphate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arianne Phosphate has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Arianne Phosphate go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Arianne Phosphate

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Arianne Phosphate. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 3.09 times less risky than Arianne Phosphate. The stock trades about -0.07 of its potential returns per unit of risk. The Arianne Phosphate is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Arianne Phosphate on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Arianne Phosphate or generate 0.0% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  Arianne Phosphate

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 latest weak 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.

Arianne Phosphate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arianne Phosphate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Arianne Phosphate reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and Arianne Phosphate

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

The idea behind Telkom Indonesia Tbk and Arianne Phosphate 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.