Correlation Between Telkom Indonesia and Esprinet SpA

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

Diversification Opportunities for Telkom Indonesia and Esprinet SpA

-0.39

Correlation Coefficient

Telkom Indonesia  Esprinet SpA

Very good diversification

The 3 months correlation between Telkom and Esprinet is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Esprinet SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esprinet SpA 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 Esprinet SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esprinet SpA has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Esprinet SpA go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Esprinet SpA

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 1.94 times more return on investment than Esprinet SpA. However, Telkom Indonesia is 1.94 times more volatile than Esprinet SpA. It trades about 0.05 of its potential returns per unit of risk. Esprinet SpA is currently generating about -0.02 per unit of risk. If you would invest  12.00  in Telkom Indonesia Tbk on April 22, 2025 and sell it today you would earn a total of  1.00  from holding Telkom Indonesia Tbk or generate 8.33% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  Esprinet SpA

Telkom Indonesia Tbk

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telkom Indonesia Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Telkom Indonesia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Esprinet SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esprinet SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Esprinet SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Telkom Indonesia and Esprinet SpA

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

The idea behind Telkom Indonesia Tbk and Esprinet SpA 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.