Correlation Between Telkom Indonesia and AMC Preferred

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

Diversification Opportunities for Telkom Indonesia and AMC Preferred

-0.61

Correlation Coefficient

Telkom Indonesia  AMC Preferred

Excellent diversification

The 3 months correlation between Telkom and AMC is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and AMC Preferred Units in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Preferred Units 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 AMC Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC Preferred Units has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and AMC Preferred go up and down completely randomly.

Pair Corralation between Telkom Indonesia and AMC Preferred

If you would invest  142.00  in AMC Preferred Units on March 2, 2024 and sell it today you would earn a total of  0.00  from holding AMC Preferred Units or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	2.33%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  AMC Preferred Units

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 weak performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AMC Preferred Units

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMC Preferred Units has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AMC Preferred is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Telkom Indonesia and AMC Preferred

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

The idea behind Telkom Indonesia Tbk and AMC Preferred Units 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.