Correlation Between Telkom Indonesia and Goodness Growth

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

Diversification Opportunities for Telkom Indonesia and Goodness Growth

-0.26

Correlation Coefficient

Telkom Indonesia  Goodness Growth

Very good diversification

The 3 months correlation between Telkom and Goodness is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and Goodness Growth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodness Growth Holdings 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 Goodness Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodness Growth Holdings has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and Goodness Growth go up and down completely randomly.

Pair Corralation between Telkom Indonesia and Goodness Growth

Assuming the 90 days horizon Telkom Indonesia Tbk is expected to under-perform the Goodness Growth. But the pink sheet apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 6.9 times less risky than Goodness Growth. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Goodness Growth Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Goodness Growth Holdings on December 4, 2024 and sell it today you would earn a total of  7.00  from holding Goodness Growth Holdings or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	47.46%
Values	Daily Returns

Telkom Indonesia Tbk  vs.  Goodness Growth Holdings

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 latest weak performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Goodness Growth Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goodness Growth Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Goodness Growth reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telkom Indonesia and Goodness Growth

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

The idea behind Telkom Indonesia Tbk and Goodness Growth Holdings 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.