Correlation Between SK Telecom and Telkom Indonesia

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

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

Diversification Opportunities for SK Telecom and Telkom Indonesia

0.68

Correlation Coefficient

SK Telecom  Telkom Indonesia

Poor diversification

The 3 months correlation between SKM and Telkom is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SK Telecom Co 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 SK Telecom 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 SK Telecom Co 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 SK Telecom i.e., SK Telecom and Telkom Indonesia go up and down completely randomly.

Pair Corralation between SK Telecom and Telkom Indonesia

Considering the 90-day investment horizon SK Telecom is expected to generate 2.48 times less return on investment than Telkom Indonesia. But when comparing it to its historical volatility, SK Telecom Co is 1.04 times less risky than Telkom Indonesia. It trades about 0.1 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,454  in Telkom Indonesia Tbk on May 7, 2025 and sell it today you would earn a total of  368.00  from holding Telkom Indonesia Tbk or generate 25.31% return on investment over 90 days.

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

SK Telecom Co  vs.  Telkom Indonesia Tbk

SK Telecom

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in SK Telecom Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, SK Telecom may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Telkom Indonesia Tbk

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Telkom Indonesia Tbk are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Telkom Indonesia disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SK Telecom and Telkom Indonesia

The main advantage of trading using opposite SK Telecom and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Telecom 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 SK Telecom Co 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.