Correlation Between Ace Hardware and Bank Victoria
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Bank Victoria 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 Victoria 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 Victoria International, you can compare the effects of market volatilities on Ace Hardware and Bank Victoria 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 Victoria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Bank Victoria.
Diversification Opportunities for Ace Hardware and Bank Victoria
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ace and Bank is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Bank Victoria International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Victoria Intern 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 Victoria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Victoria Intern has no effect on the direction of Ace Hardware i.e., Ace Hardware and Bank Victoria go up and down completely randomly.
Pair Corralation between Ace Hardware and Bank Victoria
Assuming the 90 days trading horizon Ace Hardware is expected to generate 1.65 times less return on investment than Bank Victoria. But when comparing it to its historical volatility, Ace Hardware Indonesia is 1.26 times less risky than Bank Victoria. It trades about 0.06 of its potential returns per unit of risk. Bank Victoria International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,300 in Bank Victoria International on September 2, 2024 and sell it today you would earn a total of 1,100 from holding Bank Victoria International or generate 13.25% 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. Bank Victoria International
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Bank Victoria Intern |
Ace Hardware and Bank Victoria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Bank Victoria
The main advantage of trading using opposite Ace Hardware and Bank Victoria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Bank Victoria 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 Victoria will offset losses from the drop in Bank Victoria'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 Victoria vs. Ace Hardware Indonesia | Bank Victoria vs. Merdeka Copper Gold | Bank Victoria vs. Mitra Pinasthika Mustika | Bank Victoria 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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