Correlation Between Telkom Indonesia and Orezone Gold

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

Diversification Opportunities for Telkom Indonesia and Orezone Gold

-0.03

Correlation Coefficient

Telkom Indonesia  Orezone Gold

Good diversification

The 3 months correlation between Telkom and Orezone is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Orezone Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orezone Gold 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 Orezone Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orezone Gold has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Orezone Gold go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Orezone Gold

Assuming the 90 days trading horizon Telkom Indonesia Tbk is expected to under-perform the Orezone Gold. In addition to that, Telkom Indonesia is 68.42 times more volatile than Orezone Gold. It trades about -0.24 of its total potential returns per unit of risk. Orezone Gold is currently generating about -0.13 per unit of volatility. If you would invest  54.00  in Orezone Gold on February 21, 2024 and sell it today you would lose (5.00) from holding Orezone Gold or give up 9.26% of portfolio value over 90 days.

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

Telkom Indonesia Tbk  vs.  Orezone Gold

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 fragile performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Orezone Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orezone Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Orezone Gold 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 Orezone Gold

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

The idea behind Telkom Indonesia Tbk and Orezone Gold 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.