Correlation Between Telkom Indonesia and DHAC Old

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

Diversification Opportunities for Telkom Indonesia and DHAC Old

0.0

Correlation Coefficient

Telkom Indonesia  DHAC Old

Pay attention - limited upside

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

Pair Corralation between Telkom Indonesia and DHAC Old

Assuming the 90 days horizon Telkom Indonesia Tbk is expected to under-perform the DHAC Old. But the pink sheet apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.75 times less risky than DHAC Old. The pink sheet trades about -0.01 of its potential returns per unit of risk. The DHAC Old is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,237  in DHAC Old on October 25, 2024 and sell it today you would lose (26.00) from holding DHAC Old or give up 2.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	31.09%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  DHAC Old

Telkom Indonesia Tbk

Risk-Adjusted Performance

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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 fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

DHAC Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DHAC Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, DHAC Old is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Telkom Indonesia and DHAC Old

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

The idea behind Telkom Indonesia Tbk and DHAC Old 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.