Correlation Between Telkom Indonesia and Starfleet Innotech

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

Diversification Opportunities for Telkom Indonesia and Starfleet Innotech

-0.47

Correlation Coefficient

Telkom Indonesia  Starfleet Innotech

Very good diversification

The 3 months correlation between Telkom and Starfleet is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Starfleet Innotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starfleet Innotech 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 Starfleet Innotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starfleet Innotech has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Starfleet Innotech go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Starfleet Innotech

Assuming the 90 days horizon Telkom Indonesia Tbk is expected to generate 0.09 times more return on investment than Starfleet Innotech. However, Telkom Indonesia Tbk is 11.07 times less risky than Starfleet Innotech. It trades about -0.23 of its potential returns per unit of risk. Starfleet Innotech is currently generating about -0.15 per unit of risk. If you would invest  16.00  in Telkom Indonesia Tbk on October 9, 2024 and sell it today you would lose (1.00) from holding Telkom Indonesia Tbk or give up 6.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Starfleet Innotech

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 fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Starfleet Innotech

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Telkom Indonesia and Starfleet Innotech

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

The idea behind Telkom Indonesia Tbk and Starfleet Innotech 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.