Correlation Between Ace Hardware and Bank Negara
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Bank Negara 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 Negara 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 Negara Indonesia, you can compare the effects of market volatilities on Ace Hardware and Bank Negara 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 Negara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Bank Negara.
Diversification Opportunities for Ace Hardware and Bank Negara
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ace and Bank is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Bank Negara Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Negara 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 Negara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Negara Indonesia has no effect on the direction of Ace Hardware i.e., Ace Hardware and Bank Negara go up and down completely randomly.
Pair Corralation between Ace Hardware and Bank Negara
Assuming the 90 days trading horizon Ace Hardware Indonesia is expected to under-perform the Bank Negara. In addition to that, Ace Hardware is 1.14 times more volatile than Bank Negara Indonesia. It trades about -0.34 of its total potential returns per unit of risk. Bank Negara Indonesia is currently generating about -0.1 per unit of volatility. If you would invest 520,000 in Bank Negara Indonesia on September 2, 2024 and sell it today you would lose (22,000) from holding Bank Negara Indonesia or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ace Hardware Indonesia vs. Bank Negara Indonesia
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Bank Negara Indonesia |
Ace Hardware and Bank Negara Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Bank Negara
The main advantage of trading using opposite Ace Hardware and Bank Negara positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Bank Negara 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 Negara will offset losses from the drop in Bank Negara'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 |
| Bank Negara vs. Ace Hardware Indonesia | Bank Negara vs. Merdeka Copper Gold | Bank Negara vs. Mitra Pinasthika Mustika | Bank Negara vs. Jakarta Int Hotels |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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