Correlation Between Telkom Indonesia and Flint Telecom

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

Diversification Opportunities for Telkom Indonesia and Flint Telecom

-0.33

Correlation Coefficient

Telkom Indonesia  Flint Telecom

Very good diversification

The 3 months correlation between Telkom and Flint is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Flint Telecom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flint Telecom Group 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 Flint Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flint Telecom Group has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Flint Telecom go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Flint Telecom

Assuming the 90 days horizon Telkom Indonesia Tbk is expected to under-perform the Flint Telecom. But the pink sheet apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 2.73 times less risky than Flint Telecom. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Flint Telecom Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Flint Telecom Group on October 11, 2024 and sell it today you would lose (381.00) from holding Flint Telecom Group or give up 71.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.13%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Flint Telecom Group

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 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.

Flint Telecom Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Flint Telecom Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Flint Telecom reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and Flint Telecom

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

The idea behind Telkom Indonesia Tbk and Flint Telecom Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.