Correlation Between Telkom Indonesia and Oroco Resource

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

Diversification Opportunities for Telkom Indonesia and Oroco Resource

0.76

Correlation Coefficient

Telkom Indonesia  Oroco Resource

Poor diversification

The 3 months correlation between Telkom and Oroco is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Oroco Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oroco Resource Corp 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 Oroco Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oroco Resource Corp has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Oroco Resource go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Oroco Resource

Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the Oroco Resource. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 2.15 times less risky than Oroco Resource. The stock trades about -0.13 of its potential returns per unit of risk. The Oroco Resource Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Oroco Resource Corp on September 12, 2024 and sell it today you would lose (3.00) from holding Oroco Resource Corp or give up 12.0% of portfolio value over 90 days.

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

Telkom Indonesia Tbk  vs.  Oroco Resource Corp

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 conflicting 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.

Oroco Resource Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oroco Resource Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Telkom Indonesia and Oroco Resource

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

The idea behind Telkom Indonesia Tbk and Oroco Resource Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.