Correlation Between Telkom Indonesia and Mersana Therapeutics

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

Diversification Opportunities for Telkom Indonesia and Mersana Therapeutics

0.38

Correlation Coefficient

Telkom Indonesia  Mersana Therapeutics

Weak diversification

The 3 months correlation between Telkom and Mersana is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Mersana Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mersana Therapeutics 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 Mersana Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mersana Therapeutics has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Mersana Therapeutics go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Mersana Therapeutics

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to generate 0.29 times more return on investment than Mersana Therapeutics. However, Telkom Indonesia Tbk is 3.42 times less risky than Mersana Therapeutics. It trades about -0.36 of its potential returns per unit of risk. Mersana Therapeutics is currently generating about -0.2 per unit of risk. If you would invest  2,168  in Telkom Indonesia Tbk on February 2, 2024 and sell it today you would lose (223.00) from holding Telkom Indonesia Tbk or give up 10.29% of portfolio value over 90 days.

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

Telkom Indonesia Tbk  vs.  Mersana Therapeutics

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 conflicting 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.

Mersana Therapeutics

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mersana Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Mersana Therapeutics may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Telkom Indonesia and Mersana Therapeutics

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

The idea behind Telkom Indonesia Tbk and Mersana Therapeutics 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.