Correlation Between Cosan SA and Telkom Indonesia

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

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

Diversification Opportunities for Cosan SA and Telkom Indonesia

0.01

Correlation Coefficient

Cosan SA  Telkom Indonesia

Significant diversification

The 3 months correlation between Cosan and Telkom is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cosan SA ADR 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 Cosan SA 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 Cosan SA ADR 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 Cosan SA i.e., Cosan SA and Telkom Indonesia go up and down completely randomly.

Pair Corralation between Cosan SA and Telkom Indonesia

Given the investment horizon of 90 days Cosan SA ADR is expected to under-perform the Telkom Indonesia. In addition to that, Cosan SA is 2.41 times more volatile than Telkom Indonesia Tbk. It trades about -0.02 of its total potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about 0.11 per unit of volatility. If you would invest  1,694  in Telkom Indonesia Tbk on June 29, 2025 and sell it today you would earn a total of  192.00  from holding Telkom Indonesia Tbk or generate 11.33% return on investment over 90 days.

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

Cosan SA ADR  vs.  Telkom Indonesia Tbk

Cosan SA ADR

Risk-Adjusted Performance

Weakest

Over the last 90 days Cosan SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cosan SA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Telkom Indonesia Tbk

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Telkom Indonesia Tbk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Telkom Indonesia may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Pair Trading with Cosan SA and Telkom Indonesia

The main advantage of trading using opposite Cosan SA and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosan SA 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 Cosan SA ADR 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.