Correlation Between PT Indosat and Evertz Technologies

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

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

Diversification Opportunities for PT Indosat and Evertz Technologies

-0.65

Correlation Coefficient

PT Indosat  Evertz Technologies

Excellent diversification

The 3 months correlation between PTITF and Evertz is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding PT Indosat Tbk and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies and PT Indosat 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 PT Indosat Tbk are associated (or correlated) with Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of PT Indosat i.e., PT Indosat and Evertz Technologies go up and down completely randomly.

Pair Corralation between PT Indosat and Evertz Technologies

Assuming the 90 days horizon PT Indosat Tbk is expected to generate 2.1 times more return on investment than Evertz Technologies. However, PT Indosat is 2.1 times more volatile than Evertz Technologies Limited. It trades about 0.16 of its potential returns per unit of risk. Evertz Technologies Limited is currently generating about -0.08 per unit of risk. If you would invest  62.00  in PT Indosat Tbk on February 28, 2024 and sell it today you would earn a total of  10.00  from holding PT Indosat Tbk or generate 16.13% return on investment over 90 days.

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

PT Indosat Tbk  vs.  Evertz Technologies Limited

PT Indosat Tbk

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indosat Tbk are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, PT Indosat reported solid returns over the last few months and may actually be approaching a breakup point.

Evertz Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PT Indosat and Evertz Technologies

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

The idea behind PT Indosat Tbk and Evertz Technologies Limited 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..