Correlation Between Ace Hardware and Hero Supermarket
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Hero Supermarket 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 Hero Supermarket 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 Hero Supermarket Tbk, you can compare the effects of market volatilities on Ace Hardware and Hero Supermarket 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 Hero Supermarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Hero Supermarket.
Diversification Opportunities for Ace Hardware and Hero Supermarket
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ace and Hero is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Hero Supermarket Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hero Supermarket 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 Hero Supermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hero Supermarket Tbk has no effect on the direction of Ace Hardware i.e., Ace Hardware and Hero Supermarket go up and down completely randomly.
Pair Corralation between Ace Hardware and Hero Supermarket
Assuming the 90 days trading horizon Ace Hardware Indonesia is expected to under-perform the Hero Supermarket. In addition to that, Ace Hardware is 1.43 times more volatile than Hero Supermarket Tbk. It trades about -0.19 of its total potential returns per unit of risk. Hero Supermarket Tbk is currently generating about -0.19 per unit of volatility. If you would invest 51,000 in Hero Supermarket Tbk on November 28, 2024 and sell it today you would lose (2,800) from holding Hero Supermarket Tbk or give up 5.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ace Hardware Indonesia vs. Hero Supermarket Tbk
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Hero Supermarket Tbk |
Ace Hardware and Hero Supermarket Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Hero Supermarket
The main advantage of trading using opposite Ace Hardware and Hero Supermarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Hero Supermarket 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 Hero Supermarket will offset losses from the drop in Hero Supermarket'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 |
| Hero Supermarket vs. Fast Food Indonesia | Hero Supermarket vs. Enseval Putra Megatrading | Hero Supermarket vs. Matahari Putra Prima | Hero Supermarket vs. Hexindo Adiperkasa 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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