Correlation Between Telkom Indonesia and JPX Global

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

Diversification Opportunities for Telkom Indonesia and JPX Global

0.22

Correlation Coefficient

Telkom Indonesia  JPX Global

Modest diversification

The 3 months correlation between Telkom and JPX is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and JPX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPX Global 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 JPX Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPX Global has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and JPX Global go up and down completely randomly.

Pair Corralation between Telkom Indonesia and JPX Global

Assuming the 90 days horizon Telkom Indonesia Tbk is expected to under-perform the JPX Global. But the pink sheet apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 9.44 times less risky than JPX Global. The pink sheet trades about 0.0 of its potential returns per unit of risk. The JPX Global is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.18  in JPX Global on October 5, 2024 and sell it today you would lose (0.18) from holding JPX Global or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.08%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  JPX Global

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.

JPX Global

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JPX Global are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, JPX Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and JPX Global

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

The idea behind Telkom Indonesia Tbk and JPX Global 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.