Correlation Between Telkom Indonesia and SYSTEMAIR

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

Diversification Opportunities for Telkom Indonesia and SYSTEMAIR

0.32

Correlation Coefficient

Telkom Indonesia  SYSTEMAIR

Weak diversification

The 3 months correlation between Telkom and SYSTEMAIR is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB 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 SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and SYSTEMAIR go up and down completely randomly.

Pair Corralation between Telkom Indonesia and SYSTEMAIR

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 5.52 times more return on investment than SYSTEMAIR. However, Telkom Indonesia is 5.52 times more volatile than SYSTEMAIR AB. It trades about 0.09 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about 0.15 per unit of risk. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  SYSTEMAIR AB

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 fragile forward indicators, Telkom Indonesia reported solid returns over the last few months and may actually be approaching a breakup point.

SYSTEMAIR AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SYSTEMAIR AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SYSTEMAIR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and SYSTEMAIR

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

The idea behind Telkom Indonesia Tbk and SYSTEMAIR AB 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.