Correlation Between Ace Hardware and Ashmore Asset
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Ashmore Asset 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 Ashmore Asset 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 Ashmore Asset Management, you can compare the effects of market volatilities on Ace Hardware and Ashmore Asset 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 Ashmore Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Ashmore Asset.
Diversification Opportunities for Ace Hardware and Ashmore Asset
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ace and Ashmore is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Ashmore Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Asset Management 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 Ashmore Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Asset Management has no effect on the direction of Ace Hardware i.e., Ace Hardware and Ashmore Asset go up and down completely randomly.
Pair Corralation between Ace Hardware and Ashmore Asset
Assuming the 90 days trading horizon Ace Hardware Indonesia is expected to generate 0.59 times more return on investment than Ashmore Asset. However, Ace Hardware Indonesia is 1.69 times less risky than Ashmore Asset. It trades about -0.3 of its potential returns per unit of risk. Ashmore Asset Management is currently generating about -0.27 per unit of risk. If you would invest 92,500 in Ace Hardware Indonesia on August 24, 2024 and sell it today you would lose (12,500) from holding Ace Hardware Indonesia or give up 13.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ace Hardware Indonesia vs. Ashmore Asset Management
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Ashmore Asset Management |
Ace Hardware and Ashmore Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Ashmore Asset
The main advantage of trading using opposite Ace Hardware and Ashmore Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Ashmore Asset 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 Ashmore Asset will offset losses from the drop in Ashmore Asset's long position.| Ace Hardware vs. Japfa Comfeed Indonesia | Ace Hardware vs. Charoen Pokphand Indonesia | Ace Hardware vs. Erajaya Swasembada Tbk | Ace Hardware vs. Indofood Cbp Sukses |
| Ashmore Asset vs. Bank Amar Indonesia | Ashmore Asset vs. Bhakti Multi Artha | Ashmore Asset vs. Integra Indocabinet Tbk | Ashmore Asset vs. Multistrada Arah Sarana |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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