Correlation Between Telkom Indonesia and CEOTRONICS (CEKSG)

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

Diversification Opportunities for Telkom Indonesia and CEOTRONICS (CEKSG)

-0.73

Correlation Coefficient

Telkom Indonesia  CEOTRONICS (CEKSG)

Pay attention - limited upside

The 3 months correlation between Telkom and CEOTRONICS is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS (CEKSG) 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 CEOTRONICS (CEKSG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS (CEKSG) has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and CEOTRONICS (CEKSG) go up and down completely randomly.

Pair Corralation between Telkom Indonesia and CEOTRONICS (CEKSG)

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 1.33 times more return on investment than CEOTRONICS (CEKSG). However, Telkom Indonesia is 1.33 times more volatile than CEOTRONICS. It trades about 0.02 of its potential returns per unit of risk. CEOTRONICS is currently generating about -0.06 per unit of risk. If you would invest  16.00  in Telkom Indonesia Tbk on March 11, 2024 and sell it today you would earn a total of  0.00  from holding Telkom Indonesia Tbk or generate 0.0% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  CEOTRONICS

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CEOTRONICS (CEKSG)

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CEOTRONICS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CEOTRONICS (CEKSG) unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and CEOTRONICS (CEKSG)

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

The idea behind Telkom Indonesia Tbk and CEOTRONICS 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.