Correlation Between Telkom Indonesia and Live Oak

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

Diversification Opportunities for Telkom Indonesia and Live Oak

-0.63

Correlation Coefficient

Telkom Indonesia  Live Oak

Excellent diversification

The 3 months correlation between Telkom and Live is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Live Oak Crestview in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Oak Crestview 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 Live Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Oak Crestview has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Live Oak go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Live Oak

Assuming the 90 days horizon Telkom Indonesia Tbk is expected to under-perform the Live Oak. In addition to that, Telkom Indonesia is 27.81 times more volatile than Live Oak Crestview. It trades about 0.0 of its total potential returns per unit of risk. Live Oak Crestview is currently generating about 0.15 per unit of volatility. If you would invest  997.00  in Live Oak Crestview on October 12, 2024 and sell it today you would earn a total of  30.00  from holding Live Oak Crestview or generate 3.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	34.81%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Live Oak Crestview

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 weak 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.

Live Oak Crestview

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Telkom Indonesia and Live Oak

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

The idea behind Telkom Indonesia Tbk and Live Oak Crestview 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .