Correlation Between Telkom Indonesia and Ledyard Financial

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

Diversification Opportunities for Telkom Indonesia and Ledyard Financial

-0.76

Correlation Coefficient

Telkom Indonesia  Ledyard Financial

Pay attention - limited upside

The 3 months correlation between Telkom and Ledyard is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Ledyard Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ledyard 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 Ledyard Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ledyard Financial has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Ledyard Financial go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Ledyard Financial

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Ledyard Financial. In addition to that, Telkom Indonesia is 3.33 times more volatile than Ledyard Financial Group. It trades about -0.12 of its total potential returns per unit of risk. Ledyard Financial Group is currently generating about -0.01 per unit of volatility. If you would invest  1,500  in Ledyard Financial Group on October 11, 2024 and sell it today you would lose (3.00) from holding Ledyard Financial Group or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Ledyard Financial Group

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.

Ledyard Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ledyard Financial Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Ledyard Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Telkom Indonesia and Ledyard Financial

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

The idea behind Telkom Indonesia Tbk and Ledyard Financial Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.