Correlation Between Telkom Indonesia and Potbelly

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

Diversification Opportunities for Telkom Indonesia and Potbelly

0.19

Correlation Coefficient

Telkom Indonesia  Potbelly

Average diversification

The 3 months correlation between Telkom and Potbelly is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Potbelly Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Potbelly 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 Potbelly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Potbelly has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Potbelly go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Potbelly

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Potbelly. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.8 times less risky than Potbelly. The stock trades about -0.06 of its potential returns per unit of risk. The Potbelly Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  925.00  in Potbelly Co on December 29, 2024 and sell it today you would earn a total of  9.00  from holding Potbelly Co or generate 0.97% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  Potbelly Co

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.

Potbelly

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Potbelly Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Potbelly may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Telkom Indonesia and Potbelly

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

The idea behind Telkom Indonesia Tbk and Potbelly Co 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.