Correlation Between Telkom Indonesia and Amarc Resources

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

Diversification Opportunities for Telkom Indonesia and Amarc Resources

0.81

Correlation Coefficient

Telkom Indonesia  Amarc Resources

Very poor diversification

The 3 months correlation between Telkom and Amarc is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Amarc Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amarc Resources 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 Amarc Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amarc Resources has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Amarc Resources go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Amarc Resources

Considering the 90-day investment horizon Telkom Indonesia is expected to generate 1.83 times less return on investment than Amarc Resources. But when comparing it to its historical volatility, Telkom Indonesia Tbk is 2.38 times less risky than Amarc Resources. It trades about 0.21 of its potential returns per unit of risk. Amarc Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Amarc Resources on May 1, 2025 and sell it today you would earn a total of  15.00  from holding Amarc Resources or generate 41.67% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  Amarc Resources

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 16 (%) 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.

Amarc Resources

Risk-Adjusted Performance

Good

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

Pair Trading with Telkom Indonesia and Amarc Resources

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

The idea behind Telkom Indonesia Tbk and Amarc Resources 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.