Correlation Between Telkom Indonesia and Shenandoah Telecommunicatio

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

Diversification Opportunities for Telkom Indonesia and Shenandoah Telecommunicatio

0.21

Correlation Coefficient

Telkom Indonesia  Shenandoah Telecommunicatio

Modest diversification

The 3 months correlation between Telkom and Shenandoah is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Shenandoah Telecommunicatio go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Shenandoah Telecommunicatio

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Shenandoah Telecommunicatio. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.17 times less risky than Shenandoah Telecommunicatio. The stock trades about -0.08 of its potential returns per unit of risk. The Shenandoah Telecommunications Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,267  in Shenandoah Telecommunications Co on December 22, 2024 and sell it today you would earn a total of  11.00  from holding Shenandoah Telecommunications Co or generate 0.87% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  Shenandoah Telecommunications

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 conflicting 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.

Shenandoah Telecommunicatio

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenandoah Telecommunications Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Shenandoah Telecommunicatio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Telkom Indonesia and Shenandoah Telecommunicatio

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

The idea behind Telkom Indonesia Tbk and Shenandoah Telecommunications 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..