Correlation Between Telkom Indonesia and Global Fashion
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and Global Fashion 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 Global Fashion 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 Global Fashion Group, you can compare the effects of market volatilities on Telkom Indonesia and Global Fashion 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 Global Fashion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and Global Fashion.
Diversification Opportunities for Telkom Indonesia and Global Fashion
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telkom and Global is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Global Fashion Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Fashion Group 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 Global Fashion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Fashion Group has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Global Fashion go up and down completely randomly.
Pair Corralation between Telkom Indonesia and Global Fashion
Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to generate 0.97 times more return on investment than Global Fashion. However, Telkom Indonesia Tbk is 1.03 times less risky than Global Fashion. It trades about 0.01 of its potential returns per unit of risk. Global Fashion Group is currently generating about -0.03 per unit of risk. If you would invest 23.00 in Telkom Indonesia Tbk on August 27, 2024 and sell it today you would lose (8.00) from holding Telkom Indonesia Tbk or give up 34.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. Global Fashion Group
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| Global Fashion Group |
Telkom Indonesia and Global Fashion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and Global Fashion
The main advantage of trading using opposite Telkom Indonesia and Global Fashion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, Global Fashion 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 Global Fashion will offset losses from the drop in Global Fashion's long position.The idea behind Telkom Indonesia Tbk and Global Fashion 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.| Global Fashion vs. Infrastrutture Wireless Italiane | Global Fashion vs. Transportadora de Gas | Global Fashion vs. The Hanover Insurance | Global Fashion vs. Japan Post Insurance |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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