Correlation Between Telkom Indonesia and China Gold

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

Diversification Opportunities for Telkom Indonesia and China Gold

-0.46

Correlation Coefficient

Telkom Indonesia  China Gold

Very good diversification

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

Pair Corralation between Telkom Indonesia and China Gold

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the China Gold. In addition to that, Telkom Indonesia is 1.41 times more volatile than China Gold International. It trades about -0.16 of its total potential returns per unit of risk. China Gold International is currently generating about -0.08 per unit of volatility. If you would invest  580.00  in China Gold International on December 2, 2024 and sell it today you would lose (20.00) from holding China Gold International or give up 3.45% 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.  China Gold International

Telkom Indonesia Tbk

Risk-Adjusted Performance

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

China Gold International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Gold International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, China Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and China Gold

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

The idea behind Telkom Indonesia Tbk and China Gold International 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.