Correlation Between Telkom Indonesia and SwissCom

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

Diversification Opportunities for Telkom Indonesia and SwissCom

0.89

Correlation Coefficient

Telkom Indonesia  SwissCom

Very poor diversification

The 3 months correlation between Telkom and SwissCom is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and SwissCom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SwissCom AG 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 SwissCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SwissCom AG has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and SwissCom go up and down completely randomly.

Pair Corralation between Telkom Indonesia and SwissCom

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the SwissCom. In addition to that, Telkom Indonesia is 1.44 times more volatile than SwissCom AG. It trades about -0.04 of its total potential returns per unit of risk. SwissCom AG is currently generating about 0.02 per unit of volatility. If you would invest  5,351  in SwissCom AG on September 27, 2024 and sell it today you would earn a total of  332.00  from holding SwissCom AG or generate 6.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  SwissCom AG

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

SwissCom AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SwissCom AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Telkom Indonesia and SwissCom

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

The idea behind Telkom Indonesia Tbk and SwissCom AG 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 CEOs Directory module to screen CEOs from public companies around the world.