Correlation Between Telkom Indonesia and GOLD ROAD

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

Diversification Opportunities for Telkom Indonesia and GOLD ROAD

-0.42

Correlation Coefficient

Telkom Indonesia  GOLD ROAD

Very good diversification

The 3 months correlation between Telkom and GOLD is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES 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 GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and GOLD ROAD go up and down completely randomly.

Pair Corralation between Telkom Indonesia and GOLD ROAD

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the GOLD ROAD. In addition to that, Telkom Indonesia is 2.82 times more volatile than GOLD ROAD RES. It trades about -0.02 of its total potential returns per unit of risk. GOLD ROAD RES is currently generating about 0.12 per unit of volatility. If you would invest  98.00  in GOLD ROAD RES on September 3, 2024 and sell it today you would earn a total of  15.00  from holding GOLD ROAD RES or generate 15.31% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  GOLD ROAD RES

Telkom Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telkom Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

GOLD ROAD RES

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, GOLD ROAD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and GOLD ROAD

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

The idea behind Telkom Indonesia Tbk and GOLD ROAD RES 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.