Correlation Between Ace Hardware and Metro Healthcare
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Metro Healthcare 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 Metro Healthcare 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 Metro Healthcare Indonesia, you can compare the effects of market volatilities on Ace Hardware and Metro Healthcare 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 Metro Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Metro Healthcare.
Diversification Opportunities for Ace Hardware and Metro Healthcare
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ace and Metro is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Metro Healthcare Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Healthcare Ind 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 Metro Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Healthcare Ind has no effect on the direction of Ace Hardware i.e., Ace Hardware and Metro Healthcare go up and down completely randomly.
Pair Corralation between Ace Hardware and Metro Healthcare
Assuming the 90 days trading horizon Ace Hardware Indonesia is expected to under-perform the Metro Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Ace Hardware Indonesia is 1.53 times less risky than Metro Healthcare. The stock trades about -0.3 of its potential returns per unit of risk. The Metro Healthcare Indonesia is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 13,100 in Metro Healthcare Indonesia on August 30, 2024 and sell it today you would earn a total of 3,900 from holding Metro Healthcare Indonesia or generate 29.77% 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. Metro Healthcare Indonesia
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Metro Healthcare Ind |
Ace Hardware and Metro Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Metro Healthcare
The main advantage of trading using opposite Ace Hardware and Metro Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Metro Healthcare 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 Metro Healthcare will offset losses from the drop in Metro Healthcare's long position.| Ace Hardware vs. Pembangunan Jaya Ancol | Ace Hardware vs. Panorama Sentrawisata Tbk | Ace Hardware vs. Millennium Pharmacon International | Ace Hardware vs. Tempo Inti Media |
| Metro Healthcare vs. Medikaloka Hermina PT | Metro Healthcare vs. Sarana Meditama Metropolitan | Metro Healthcare vs. Mitra Keluarga Karyasehat | Metro Healthcare vs. Bhakti Multi Artha |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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