Correlation Between Ace Hardware and Buana Finance
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Buana Finance 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 Buana Finance 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 Buana Finance Tbk, you can compare the effects of market volatilities on Ace Hardware and Buana Finance 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 Buana Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Buana Finance.
Diversification Opportunities for Ace Hardware and Buana Finance
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ace and Buana is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Buana Finance Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buana Finance Tbk 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 Buana Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buana Finance Tbk has no effect on the direction of Ace Hardware i.e., Ace Hardware and Buana Finance go up and down completely randomly.
Pair Corralation between Ace Hardware and Buana Finance
Assuming the 90 days trading horizon Ace Hardware Indonesia is expected to generate 0.76 times more return on investment than Buana Finance. However, Ace Hardware Indonesia is 1.32 times less risky than Buana Finance. It trades about 0.06 of its potential returns per unit of risk. Buana Finance Tbk is currently generating about 0.02 per unit of risk. If you would invest 71,500 in Ace Hardware Indonesia on September 2, 2024 and sell it today you would earn a total of 5,500 from holding Ace Hardware Indonesia or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ace Hardware Indonesia vs. Buana Finance Tbk
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Buana Finance Tbk |
Ace Hardware and Buana Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Buana Finance
The main advantage of trading using opposite Ace Hardware and Buana Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Buana Finance 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 Buana Finance will offset losses from the drop in Buana Finance'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 |
| Buana Finance vs. Asuransi Ramayana Tbk | Buana Finance vs. Clipan Finance Indonesia | Buana Finance vs. Asuransi Bintang Tbk | Buana Finance vs. Asuransi Dayin Mitra |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |