Correlation Between Telkom Indonesia and Everi Holdings

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

Diversification Opportunities for Telkom Indonesia and Everi Holdings

-0.38

Correlation Coefficient

Telkom Indonesia  Everi Holdings

Very good diversification

The 3 months correlation between Telkom and Everi is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Everi Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everi Holdings 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 Everi Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everi Holdings has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Everi Holdings go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Everi Holdings

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Everi Holdings. In addition to that, Telkom Indonesia is 11.33 times more volatile than Everi Holdings. It trades about -0.06 of its total potential returns per unit of risk. Everi Holdings is currently generating about 0.08 per unit of volatility. If you would invest  1,348  in Everi Holdings on December 28, 2024 and sell it today you would earn a total of  13.00  from holding Everi Holdings or generate 0.96% 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.  Everi Holdings

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 conflicting 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.

Everi Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Everi Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Everi Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Telkom Indonesia and Everi Holdings

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

The idea behind Telkom Indonesia Tbk and Everi Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.