Correlation Between Telkom Indonesia and Groupe Gorgé

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

Diversification Opportunities for Telkom Indonesia and Groupe Gorgé

0.24

Correlation Coefficient

Telkom Indonesia  Groupe Gorgé

Modest diversification

The 3 months correlation between Telkom and Groupe is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Groupe Gorg SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Gorg SA 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 Groupe Gorgé. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Gorg SA has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Groupe Gorgé go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Groupe Gorgé

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Groupe Gorgé. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.62 times less risky than Groupe Gorgé. The stock trades about -0.19 of its potential returns per unit of risk. The Groupe Gorg SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,906  in Groupe Gorg SA on January 31, 2024 and sell it today you would earn a total of  26.00  from holding Groupe Gorg SA or generate 1.36% return on investment over 90 days.

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

Telkom Indonesia Tbk  vs.  Groupe Gorg SA

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Groupe Gorg SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Groupe Gorg SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Groupe Gorgé is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Telkom Indonesia and Groupe Gorgé

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

The idea behind Telkom Indonesia Tbk and Groupe Gorg SA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.