Correlation Between Telkom Indonesia and InterRent Real

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

Diversification Opportunities for Telkom Indonesia and InterRent Real

0.45

Correlation Coefficient

Telkom Indonesia  InterRent Real

Very weak diversification

The 3 months correlation between Telkom and InterRent is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and InterRent Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterRent Real Estate 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 InterRent Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterRent Real Estate has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and InterRent Real go up and down completely randomly.

Pair Corralation between Telkom Indonesia and InterRent Real

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the InterRent Real. In addition to that, Telkom Indonesia is 1.16 times more volatile than InterRent Real Estate. It trades about -0.08 of its total potential returns per unit of risk. InterRent Real Estate is currently generating about 0.12 per unit of volatility. If you would invest  711.00  in InterRent Real Estate on December 21, 2024 and sell it today you would earn a total of  61.00  from holding InterRent Real Estate or generate 8.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	66.1%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  InterRent Real Estate

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.

InterRent Real Estate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InterRent Real Estate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, InterRent Real reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and InterRent Real

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

The idea behind Telkom Indonesia Tbk and InterRent Real Estate 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.