Correlation Between Telkom Indonesia and Tarena Intl

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

Diversification Opportunities for Telkom Indonesia and Tarena Intl

0.71

Correlation Coefficient

Telkom Indonesia  Tarena Intl

Poor diversification

The 3 months correlation between Telkom and Tarena is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Tarena Intl Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarena Intl Adr 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 Tarena Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarena Intl Adr has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Tarena Intl go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Tarena Intl

If you would invest  1,632  in Telkom Indonesia Tbk on September 19, 2024 and sell it today you would earn a total of  5.00  from holding Telkom Indonesia Tbk or generate 0.31% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  Tarena Intl Adr

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 uncertain performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tarena Intl Adr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tarena Intl Adr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Tarena Intl is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Telkom Indonesia and Tarena Intl

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

The idea behind Telkom Indonesia Tbk and Tarena Intl Adr 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.