Correlation Between Telkom Indonesia and Harbour Energy

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

Diversification Opportunities for Telkom Indonesia and Harbour Energy

0.74

Correlation Coefficient

Telkom Indonesia  Harbour Energy

Poor diversification

The 3 months correlation between Telkom and Harbour is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Harbour Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbour Energy PLC 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 Harbour Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbour Energy PLC has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Harbour Energy go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Harbour Energy

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Harbour Energy. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.97 times less risky than Harbour Energy. The stock trades about -0.09 of its potential returns per unit of risk. The Harbour Energy PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  310.00  in Harbour Energy PLC on October 2, 2024 and sell it today you would lose (25.00) from holding Harbour Energy PLC or give up 8.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.56%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Harbour Energy PLC

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.

Harbour Energy PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harbour Energy PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Telkom Indonesia and Harbour Energy

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

The idea behind Telkom Indonesia Tbk and Harbour Energy PLC 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.