Correlation Between Telstra and PT Sarana

Can any of the company-specific risk be diversified away by investing in both Telstra and PT Sarana 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 Telstra and PT Sarana into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Telstra Limited and PT Sarana Menara, you can compare the effects of market volatilities on Telstra and PT Sarana 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 Telstra with a short position of PT Sarana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telstra and PT Sarana.

Diversification Opportunities for Telstra and PT Sarana

0.0

Correlation Coefficient

Telstra  PT Sarana

Pay attention - limited upside

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

Pair Corralation between Telstra and PT Sarana

If you would invest  238.00  in Telstra Limited on November 19, 2024 and sell it today you would earn a total of  6.00  from holding Telstra Limited or generate 2.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Telstra Limited  vs.  PT Sarana Menara

Telstra Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Telstra Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Telstra may actually be approaching a critical reversion point that can send shares even higher in March 2025.

PT Sarana Menara

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Sarana Menara has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Sarana is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Telstra and PT Sarana

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

The idea behind Telstra Limited and PT Sarana Menara 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.