Correlation Between Ace Hardware and Garuda Metalindo
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Garuda Metalindo 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 Garuda Metalindo 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 Garuda Metalindo Tbk, you can compare the effects of market volatilities on Ace Hardware and Garuda Metalindo 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 Garuda Metalindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Garuda Metalindo.
Diversification Opportunities for Ace Hardware and Garuda Metalindo
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ace and Garuda is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Garuda Metalindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garuda Metalindo 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 Garuda Metalindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garuda Metalindo Tbk has no effect on the direction of Ace Hardware i.e., Ace Hardware and Garuda Metalindo go up and down completely randomly.
Pair Corralation between Ace Hardware and Garuda Metalindo
Assuming the 90 days trading horizon Ace Hardware is expected to generate 13.6 times less return on investment than Garuda Metalindo. In addition to that, Ace Hardware is 1.45 times more volatile than Garuda Metalindo Tbk. It trades about 0.01 of its total potential returns per unit of risk. Garuda Metalindo Tbk is currently generating about 0.14 per unit of volatility. If you would invest 102,500 in Garuda Metalindo Tbk on November 28, 2024 and sell it today you would earn a total of 29,000 from holding Garuda Metalindo Tbk or generate 28.29% 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. Garuda Metalindo Tbk
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Garuda Metalindo Tbk |
Ace Hardware and Garuda Metalindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Garuda Metalindo
The main advantage of trading using opposite Ace Hardware and Garuda Metalindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Garuda Metalindo 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 Garuda Metalindo will offset losses from the drop in Garuda Metalindo'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 |
| Garuda Metalindo vs. Indo Kordsa Tbk | Garuda Metalindo vs. Indospring Tbk | Garuda Metalindo vs. Kabelindo Murni Tbk | Garuda Metalindo vs. Blue Bird Tbk |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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