Correlation Between Ace Hardware and Galva Technologies
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Galva Technologies 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 Galva Technologies 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 Galva Technologies Tbk, you can compare the effects of market volatilities on Ace Hardware and Galva Technologies 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 Galva Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Galva Technologies.
Diversification Opportunities for Ace Hardware and Galva Technologies
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ace and Galva is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Galva Technologies Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galva Technologies 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 Galva Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galva Technologies Tbk has no effect on the direction of Ace Hardware i.e., Ace Hardware and Galva Technologies go up and down completely randomly.
Pair Corralation between Ace Hardware and Galva Technologies
Assuming the 90 days trading horizon Ace Hardware Indonesia is expected to generate 0.57 times more return on investment than Galva Technologies. However, Ace Hardware Indonesia is 1.76 times less risky than Galva Technologies. It trades about 0.05 of its potential returns per unit of risk. Galva Technologies Tbk is currently generating about 0.0 per unit of risk. If you would invest 57,739 in Ace Hardware Indonesia on August 27, 2024 and sell it today you would earn a total of 21,261 from holding Ace Hardware Indonesia or generate 36.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Ace Hardware Indonesia vs. Galva Technologies Tbk
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Galva Technologies Tbk |
Ace Hardware and Galva Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Galva Technologies
The main advantage of trading using opposite Ace Hardware and Galva Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Galva Technologies 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 Galva Technologies will offset losses from the drop in Galva Technologies' 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 |
| Galva Technologies vs. Multipolar Technology Tbk | Galva Technologies vs. Nusantara Voucher Distribution | Galva Technologies vs. Hensel Davest Indonesia | Galva Technologies vs. Anabatic Technologies 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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