Correlation Between Telkom Indonesia and G III

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

Diversification Opportunities for Telkom Indonesia and G III

-0.27

Correlation Coefficient

Telkom Indonesia  G III

Very good diversification

The 3 months correlation between Telkom and GI4 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and G III go up and down completely randomly.

Pair Corralation between Telkom Indonesia and G III

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 2.71 times more return on investment than G III. However, Telkom Indonesia is 2.71 times more volatile than G III Apparel Group. It trades about 0.11 of its potential returns per unit of risk. G III Apparel Group is currently generating about 0.17 per unit of risk. If you would invest  16.00  in Telkom Indonesia Tbk on September 5, 2024 and sell it today you would earn a total of  2.00  from holding Telkom Indonesia Tbk or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  G III Apparel Group

Telkom Indonesia Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Telkom Indonesia Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Telkom Indonesia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

G III Apparel

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, G III unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and G III

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

The idea behind Telkom Indonesia Tbk and G III Apparel Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.