Correlation Between Telkom Indonesia and Credit Agricole

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

Diversification Opportunities for Telkom Indonesia and Credit Agricole

-0.87

Correlation Coefficient

Telkom Indonesia  Credit Agricole

Pay attention - limited upside

The 3 months correlation between Telkom and Credit is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Credit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Agricole SA 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 Credit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Agricole SA has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Credit Agricole go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Credit Agricole

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Credit Agricole. In addition to that, Telkom Indonesia is 1.91 times more volatile than Credit Agricole SA. It trades about -0.26 of its total potential returns per unit of risk. Credit Agricole SA is currently generating about 0.44 per unit of volatility. If you would invest  673.00  in Credit Agricole SA on February 19, 2024 and sell it today you would earn a total of  188.00  from holding Credit Agricole SA or generate 27.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Credit Agricole SA

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.

Credit Agricole SA

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Agricole SA are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Credit Agricole showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and Credit Agricole

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

The idea behind Telkom Indonesia Tbk and Credit Agricole SA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.