Correlation Between Telkom Indonesia and Arconic

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

Diversification Opportunities for Telkom Indonesia and Arconic

-0.9

Correlation Coefficient

Telkom Indonesia  Arconic

Pay attention - limited upside

The 3 months correlation between Telkom and Arconic is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Arconic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arconic 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 Arconic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arconic has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Arconic go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Arconic

If you would invest  2,999  in Arconic on February 6, 2024 and sell it today you would earn a total of  0.00  from holding Arconic or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Arconic

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 unsteady performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Arconic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arconic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Arconic 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 Arconic

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

The idea behind Telkom Indonesia Tbk and Arconic 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.