Correlation Between Telkom Indonesia and Cartier Resources

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

Diversification Opportunities for Telkom Indonesia and Cartier Resources

-0.51

Correlation Coefficient

Telkom Indonesia  Cartier Resources

Excellent diversification

The 3 months correlation between Telkom and Cartier is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Cartier Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartier Resources 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 Cartier Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartier Resources has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Cartier Resources go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Cartier Resources

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Cartier Resources. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 4.22 times less risky than Cartier Resources. The stock trades about -0.06 of its potential returns per unit of risk. The Cartier Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6.70  in Cartier Resources on December 29, 2024 and sell it today you would earn a total of  2.40  from holding Cartier Resources or generate 35.82% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  Cartier Resources

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.

Cartier Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cartier Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Cartier Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and Cartier Resources

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

The idea behind Telkom Indonesia Tbk and Cartier Resources 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.