Correlation Between Telkom Indonesia and USU Software

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

Diversification Opportunities for Telkom Indonesia and USU Software

0.62

Correlation Coefficient

Telkom Indonesia  USU Software

Poor diversification

The 3 months correlation between Telkom and USU is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and USU Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USU Software AG 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 USU Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USU Software AG has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and USU Software go up and down completely randomly.

Pair Corralation between Telkom Indonesia and USU Software

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 2.8 times more return on investment than USU Software. However, Telkom Indonesia is 2.8 times more volatile than USU Software AG. It trades about 0.07 of its potential returns per unit of risk. USU Software AG is currently generating about 0.14 per unit of risk. If you would invest  11.00  in Telkom Indonesia Tbk on April 5, 2025 and sell it today you would earn a total of  2.00  from holding Telkom Indonesia Tbk or generate 18.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  USU Software AG

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 5 (%) 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.

USU Software AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USU Software AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, USU Software reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and USU Software

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

The idea behind Telkom Indonesia Tbk and USU Software AG 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.