Correlation Between Telkom Indonesia and Brinker International

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

Diversification Opportunities for Telkom Indonesia and Brinker International

-0.9

Correlation Coefficient

Telkom Indonesia  Brinker International

Pay attention - limited upside

The 3 months correlation between Telkom and Brinker is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International 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 Brinker International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinker International has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Brinker International go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Brinker International

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Brinker International. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.41 times less risky than Brinker International. The stock trades about -0.14 of its potential returns per unit of risk. The Brinker International is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  7,152  in Brinker International on August 30, 2024 and sell it today you would earn a total of  5,917  from holding Brinker International or generate 82.73% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  Brinker International

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 conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Brinker International

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Brinker International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and Brinker International

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

The idea behind Telkom Indonesia Tbk and Brinker International 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.