Correlation Between Gogo and Telkom Indonesia

Can any of the company-specific risk be diversified away by investing in both Gogo and Telkom Indonesia 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 Gogo and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gogo Inc and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Gogo and Telkom Indonesia 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 Gogo with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gogo and Telkom Indonesia.

Diversification Opportunities for Gogo and Telkom Indonesia

-0.46

Correlation Coefficient

Gogo  Telkom Indonesia

Very good diversification

The 3 months correlation between Gogo and Telkom is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Gogo Inc and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk and Gogo 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 Gogo Inc are associated (or correlated) with Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of Gogo i.e., Gogo and Telkom Indonesia go up and down completely randomly.

Pair Corralation between Gogo and Telkom Indonesia

Given the investment horizon of 90 days Gogo Inc is expected to generate 2.81 times more return on investment than Telkom Indonesia. However, Gogo is 2.81 times more volatile than Telkom Indonesia Tbk. It trades about 0.02 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.14 per unit of risk. If you would invest  796.00  in Gogo Inc on September 3, 2024 and sell it today you would earn a total of  7.00  from holding Gogo Inc or generate 0.88% return on investment over 90 days.

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

Gogo Inc  vs.  Telkom Indonesia Tbk

Gogo Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gogo Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Gogo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Gogo and Telkom Indonesia

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

The idea behind Gogo Inc and Telkom Indonesia Tbk 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.