Correlation Between Ace Hardware and Bank Rakyat
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Bank Rakyat 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 Ace Hardware and Bank Rakyat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ace Hardware Indonesia and Bank Rakyat Indonesia, you can compare the effects of market volatilities on Ace Hardware and Bank Rakyat 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 Ace Hardware with a short position of Bank Rakyat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Bank Rakyat.
Diversification Opportunities for Ace Hardware and Bank Rakyat
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ace and Bank is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Bank Rakyat Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat Indonesia and Ace Hardware 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 Ace Hardware Indonesia are associated (or correlated) with Bank Rakyat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Rakyat Indonesia has no effect on the direction of Ace Hardware i.e., Ace Hardware and Bank Rakyat go up and down completely randomly.
Pair Corralation between Ace Hardware and Bank Rakyat
Assuming the 90 days trading horizon Ace Hardware Indonesia is expected to generate 0.94 times more return on investment than Bank Rakyat. However, Ace Hardware Indonesia is 1.06 times less risky than Bank Rakyat. It trades about 0.06 of its potential returns per unit of risk. Bank Rakyat Indonesia is currently generating about -0.04 per unit of risk. If you would invest 39,776 in Ace Hardware Indonesia on September 3, 2024 and sell it today you would earn a total of 37,224 from holding Ace Hardware Indonesia or generate 93.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Ace Hardware Indonesia vs. Bank Rakyat Indonesia
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Bank Rakyat Indonesia |
Ace Hardware and Bank Rakyat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Bank Rakyat
The main advantage of trading using opposite Ace Hardware and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Bank Rakyat 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 Bank Rakyat will offset losses from the drop in Bank Rakyat's long position.| Ace Hardware vs. Mitra Pinasthika Mustika | Ace Hardware vs. Jakarta Int Hotels | Ace Hardware vs. Asuransi Harta Aman | Ace Hardware vs. Indosterling Technomedia Tbk |
| Bank Rakyat vs. Paninvest Tbk | Bank Rakyat vs. Mitra Pinasthika Mustika | Bank Rakyat vs. Jakarta Int Hotels | Bank Rakyat vs. Asuransi Harta Aman |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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