Correlation Between Telstra and PT Sarana

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

By analyzing existing cross correlation between Telstra Limited and PT Sarana Menara, you can compare the effects of market volatilities on Telstra and PT Sarana 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 Telstra with a short position of PT Sarana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telstra and PT Sarana.

Diversification Opportunities for Telstra and PT Sarana

-0.16

Correlation Coefficient

Telstra  PT Sarana

Good diversification

The 3 months correlation between Telstra and SMNUF is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Telstra Limited and PT Sarana Menara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Sarana Menara and Telstra 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 Telstra Limited are associated (or correlated) with PT Sarana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Sarana Menara has no effect on the direction of Telstra i.e., Telstra and PT Sarana go up and down completely randomly.

Pair Corralation between Telstra and PT Sarana

Assuming the 90 days horizon Telstra Limited is expected to generate 0.6 times more return on investment than PT Sarana. However, Telstra Limited is 1.67 times less risky than PT Sarana. It trades about 0.09 of its potential returns per unit of risk. PT Sarana Menara is currently generating about -0.09 per unit of risk. If you would invest  276.00  in Telstra Limited on May 8, 2025 and sell it today you would earn a total of  40.00  from holding Telstra Limited or generate 14.49% return on investment over 90 days.

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

Telstra Limited  vs.  PT Sarana Menara

Telstra Limited

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Telstra Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Telstra reported solid returns over the last few months and may actually be approaching a breakup point.

PT Sarana Menara

Risk-Adjusted Performance

Weakest

Over the last 90 days PT Sarana Menara has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Telstra and PT Sarana

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

The idea behind Telstra Limited and PT Sarana Menara 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.