Correlation Between LION ONE and Telkom Indonesia

Can any of the company-specific risk be diversified away by investing in both LION ONE and Telkom Indonesia 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 LION ONE and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LION ONE METALS and Telkom Indonesia Tbk, you can compare the effects of market volatilities on LION ONE and Telkom Indonesia 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 LION ONE with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Telkom Indonesia.

Diversification Opportunities for LION ONE and Telkom Indonesia

0.14

Correlation Coefficient

LION ONE  Telkom Indonesia

Average diversification

The 3 months correlation between LION and Telkom is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk and LION ONE 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 LION ONE METALS are associated (or correlated) with Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of LION ONE i.e., LION ONE and Telkom Indonesia go up and down completely randomly.

Pair Corralation between LION ONE and Telkom Indonesia

Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Telkom Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, LION ONE METALS is 2.59 times less risky than Telkom Indonesia. The stock trades about 0.0 of its potential returns per unit of risk. The Telkom Indonesia Tbk is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Telkom Indonesia Tbk on April 24, 2025 and sell it today you would earn a total of  3.00  from holding Telkom Indonesia Tbk or generate 25.0% return on investment over 90 days.

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

LION ONE METALS  vs.  Telkom Indonesia Tbk

LION ONE METALS

Risk-Adjusted Performance

Very Weak

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

Telkom Indonesia Tbk

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Telkom Indonesia Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Telkom Indonesia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LION ONE and Telkom Indonesia

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

The idea behind LION ONE METALS and Telkom Indonesia Tbk 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.