Correlation Between Ace Hardware and First Media
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and First Media 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 First Media 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 First Media Tbk, you can compare the effects of market volatilities on Ace Hardware and First Media 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 First Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and First Media.
Diversification Opportunities for Ace Hardware and First Media
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ace and First is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and First Media Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Media 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 First Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Media Tbk has no effect on the direction of Ace Hardware i.e., Ace Hardware and First Media go up and down completely randomly.
Pair Corralation between Ace Hardware and First Media
Assuming the 90 days trading horizon Ace Hardware Indonesia is expected to generate 0.9 times more return on investment than First Media. However, Ace Hardware Indonesia is 1.11 times less risky than First Media. It trades about -0.01 of its potential returns per unit of risk. First Media Tbk is currently generating about -0.08 per unit of risk. If you would invest 75,500 in Ace Hardware Indonesia on November 3, 2024 and sell it today you would lose (500.00) from holding Ace Hardware Indonesia or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ace Hardware Indonesia vs. First Media Tbk
Performance |
| Timeline |
| Ace Hardware Indonesia |
| First Media Tbk |
Ace Hardware and First Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and First Media
The main advantage of trading using opposite Ace Hardware and First Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, First Media 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 First Media will offset losses from the drop in First Media'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 |
| First Media vs. Fast Food Indonesia | First Media vs. Garudafood Putra Putri | First Media vs. HK Metals Utama | First Media vs. Alumindo Light Metal |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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