Correlation Between Telkom Indonesia and Patriot Transportation

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

Diversification Opportunities for Telkom Indonesia and Patriot Transportation

0.0

Correlation Coefficient

Telkom Indonesia  Patriot Transportation

Pay attention - limited upside

The 3 months correlation between Telkom and Patriot is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Patriot Transportation Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Transportation 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 Patriot Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Transportation has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Patriot Transportation go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Patriot Transportation

If you would invest (100.00) in Patriot Transportation Holding on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Patriot Transportation Holding or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Patriot Transportation Holding

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 weak 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.

Patriot Transportation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Patriot Transportation Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Patriot Transportation is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Telkom Indonesia and Patriot Transportation

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

The idea behind Telkom Indonesia Tbk and Patriot Transportation Holding 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.