Correlation Between X-FAB Silicon and Telkom Indonesia

Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and Telkom Indonesia 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 X-FAB Silicon and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between X FAB Silicon Foundries and Telkom Indonesia Tbk, you can compare the effects of market volatilities on X-FAB Silicon and Telkom Indonesia 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 X-FAB Silicon with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and Telkom Indonesia.

Diversification Opportunities for X-FAB Silicon and Telkom Indonesia

0.42

Correlation Coefficient

X-FAB Silicon  Telkom Indonesia

Very weak diversification

The 3 months correlation between X-FAB and Telkom is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk and X-FAB Silicon 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 X FAB Silicon Foundries are associated (or correlated) with Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Telkom Indonesia go up and down completely randomly.

Pair Corralation between X-FAB Silicon and Telkom Indonesia

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Telkom Indonesia. In addition to that, X-FAB Silicon is 1.24 times more volatile than Telkom Indonesia Tbk. It trades about -0.08 of its total potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.09 per unit of volatility. If you would invest  16.00  in Telkom Indonesia Tbk on December 24, 2024 and sell it today you would lose (2.00) from holding Telkom Indonesia Tbk or give up 12.5% of portfolio value over 90 days.

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

X FAB Silicon Foundries  vs.  Telkom Indonesia Tbk

X FAB Silicon

Risk-Adjusted Performance

Very Weak

Over the last 90 days X FAB Silicon Foundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Telkom Indonesia Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Telkom Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with X-FAB Silicon and Telkom Indonesia

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

The idea behind X FAB Silicon Foundries and Telkom Indonesia Tbk 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.