Correlation Between Telkom Indonesia and Cytta Corp

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

Diversification Opportunities for Telkom Indonesia and Cytta Corp

-0.02

Correlation Coefficient

Telkom Indonesia  Cytta Corp

Good diversification

The 3 months correlation between Telkom and Cytta is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Cytta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytta Corp 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 Cytta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytta Corp has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Cytta Corp go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Cytta Corp

Assuming the 90 days horizon Telkom Indonesia Tbk is expected to generate 0.17 times more return on investment than Cytta Corp. However, Telkom Indonesia Tbk is 5.86 times less risky than Cytta Corp. It trades about 0.19 of its potential returns per unit of risk. Cytta Corp is currently generating about 0.01 per unit of risk. If you would invest  15.00  in Telkom Indonesia Tbk on December 28, 2024 and sell it today you would earn a total of  1.00  from holding Telkom Indonesia Tbk or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	44.26%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Cytta Corp

Telkom Indonesia Tbk

Risk-Adjusted Performance

Good

Over the last 90 days Telkom Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile primary indicators, Telkom Indonesia reported solid returns over the last few months and may actually be approaching a breakup point.

Cytta Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cytta Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Cytta Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Telkom Indonesia and Cytta Corp

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

The idea behind Telkom Indonesia Tbk and Cytta Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.