Correlation Between Telkom Indonesia and Juniata Valley

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

Diversification Opportunities for Telkom Indonesia and Juniata Valley

-0.11

Correlation Coefficient

Telkom Indonesia  Juniata Valley

Good diversification

The 3 months correlation between Telkom and Juniata is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Juniata Valley Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniata Valley Financial 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 Juniata Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniata Valley Financial has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Juniata Valley go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Juniata Valley

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Juniata Valley. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.16 times less risky than Juniata Valley. The stock trades about -0.07 of its potential returns per unit of risk. The Juniata Valley Financial is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,303  in Juniata Valley Financial on December 28, 2024 and sell it today you would lose (53.00) from holding Juniata Valley Financial or give up 4.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Juniata Valley Financial

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.

Juniata Valley Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Juniata Valley Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Juniata Valley is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Telkom Indonesia and Juniata Valley

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

The idea behind Telkom Indonesia Tbk and Juniata Valley Financial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.