Correlation Between Ace Hardware and Hoffmen Cleanindo
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Hoffmen Cleanindo 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 Hoffmen Cleanindo 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 Hoffmen Cleanindo, you can compare the effects of market volatilities on Ace Hardware and Hoffmen Cleanindo 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 Hoffmen Cleanindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Hoffmen Cleanindo.
Diversification Opportunities for Ace Hardware and Hoffmen Cleanindo
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ace and Hoffmen is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Hoffmen Cleanindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoffmen Cleanindo 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 Hoffmen Cleanindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoffmen Cleanindo has no effect on the direction of Ace Hardware i.e., Ace Hardware and Hoffmen Cleanindo go up and down completely randomly.
Pair Corralation between Ace Hardware and Hoffmen Cleanindo
Assuming the 90 days trading horizon Ace Hardware Indonesia is expected to generate 0.68 times more return on investment than Hoffmen Cleanindo. However, Ace Hardware Indonesia is 1.47 times less risky than Hoffmen Cleanindo. It trades about 0.03 of its potential returns per unit of risk. Hoffmen Cleanindo is currently generating about -0.02 per unit of risk. If you would invest 62,780 in Ace Hardware Indonesia on September 1, 2024 and sell it today you would earn a total of 14,220 from holding Ace Hardware Indonesia or generate 22.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Ace Hardware Indonesia vs. Hoffmen Cleanindo
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Hoffmen Cleanindo |
Ace Hardware and Hoffmen Cleanindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Hoffmen Cleanindo
The main advantage of trading using opposite Ace Hardware and Hoffmen Cleanindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Hoffmen Cleanindo 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 Hoffmen Cleanindo will offset losses from the drop in Hoffmen Cleanindo'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 |
| Hoffmen Cleanindo vs. Bank Central Asia | Hoffmen Cleanindo vs. Bank Rakyat Indonesia | Hoffmen Cleanindo vs. Bayan Resources Tbk | Hoffmen Cleanindo vs. Bank Mandiri Persero |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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