Correlation Between Ace Hardware and Bank Bumi
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Bank Bumi 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 Bumi 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 Bumi Arta, you can compare the effects of market volatilities on Ace Hardware and Bank Bumi 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 Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Bank Bumi.
Diversification Opportunities for Ace Hardware and Bank Bumi
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ace and Bank is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Bank Bumi Arta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Bumi Arta 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 Bumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Bumi Arta has no effect on the direction of Ace Hardware i.e., Ace Hardware and Bank Bumi go up and down completely randomly.
Pair Corralation between Ace Hardware and Bank Bumi
Assuming the 90 days trading horizon Ace Hardware Indonesia is expected to generate 1.1 times more return on investment than Bank Bumi. However, Ace Hardware is 1.1 times more volatile than Bank Bumi Arta. It trades about 0.06 of its potential returns per unit of risk. Bank Bumi Arta is currently generating about -0.09 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ace Hardware Indonesia vs. Bank Bumi Arta
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Bank Bumi Arta |
Ace Hardware and Bank Bumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Bank Bumi
The main advantage of trading using opposite Ace Hardware and Bank Bumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Bank Bumi 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 Bumi will offset losses from the drop in Bank Bumi'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 Bumi vs. Bank Capital Indonesia | Bank Bumi vs. Bank Mnc Internasional | Bank Bumi vs. Bank Victoria International | Bank Bumi vs. Bank Qnb Indonesia |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |