Correlation Between Telkom Indonesia and NRBO Old

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

Diversification Opportunities for Telkom Indonesia and NRBO Old

-0.4

Correlation Coefficient

Telkom Indonesia  NRBO Old

Very good diversification

The 3 months correlation between Telkom and NRBO is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and NRBO Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRBO Old 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 NRBO Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRBO Old has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and NRBO Old go up and down completely randomly.

Pair Corralation between Telkom Indonesia and NRBO Old

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the NRBO Old. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 2.57 times less risky than NRBO Old. The stock trades about -0.1 of its potential returns per unit of risk. The NRBO Old is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  181.00  in NRBO Old on December 26, 2024 and sell it today you would earn a total of  8.00  from holding NRBO Old or generate 4.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	38.33%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  NRBO Old

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

NRBO Old

Risk-Adjusted Performance

Insignificant

Over the last 90 days NRBO Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak fundamental drivers, NRBO Old displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and NRBO Old

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

The idea behind Telkom Indonesia Tbk and NRBO Old 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.