Correlation Between Telkom Indonesia and Katahdin Bankshares

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

Diversification Opportunities for Telkom Indonesia and Katahdin Bankshares

-0.73

Correlation Coefficient

Telkom Indonesia  Katahdin Bankshares

Pay attention - limited upside

The 3 months correlation between Telkom and Katahdin is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Katahdin Bankshares Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katahdin Bankshares Corp 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 Katahdin Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katahdin Bankshares Corp has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Katahdin Bankshares go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Katahdin Bankshares

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Katahdin Bankshares. In addition to that, Telkom Indonesia is 1.56 times more volatile than Katahdin Bankshares Corp. It trades about -0.04 of its total potential returns per unit of risk. Katahdin Bankshares Corp is currently generating about -0.04 per unit of volatility. If you would invest  2,500  in Katahdin Bankshares Corp on October 9, 2024 and sell it today you would lose (25.00) from holding Katahdin Bankshares Corp or give up 1.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Katahdin Bankshares Corp

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 conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Katahdin Bankshares Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Katahdin Bankshares Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical indicators, Katahdin Bankshares displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and Katahdin Bankshares

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

The idea behind Telkom Indonesia Tbk and Katahdin Bankshares Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.