Correlation Between Telkom Indonesia and African Gold
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and African Gold 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 African Gold 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 African Gold Acquisition, you can compare the effects of market volatilities on Telkom Indonesia and African Gold 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 African Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and African Gold.
Diversification Opportunities for Telkom Indonesia and African Gold
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Telkom and African is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and African Gold Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Gold Acquisition 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 African Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Gold Acquisition has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and African Gold go up and down completely randomly.
Pair Corralation between Telkom Indonesia and African Gold
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the African Gold. In addition to that, Telkom Indonesia is 15.35 times more volatile than African Gold Acquisition. It trades about -0.07 of its total potential returns per unit of risk. African Gold Acquisition is currently generating about 0.4 per unit of volatility. If you would invest 1,048 in African Gold Acquisition on August 31, 2024 and sell it today you would earn a total of 12.00 from holding African Gold Acquisition or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 8.29% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. African Gold Acquisition
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| African Gold Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Telkom Indonesia and African Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and African Gold
The main advantage of trading using opposite Telkom Indonesia and African Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, African Gold 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 African Gold will offset losses from the drop in African Gold's long position.| Telkom Indonesia vs. RLJ Lodging Trust | Telkom Indonesia vs. Aquagold International | Telkom Indonesia vs. Stepstone Group | Telkom Indonesia vs. Morningstar Unconstrained Allocation |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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