Correlation Between Ace Hardware and Pertamina Geothermal
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Pertamina Geothermal 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 Pertamina Geothermal 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 Pertamina Geothermal Energy, you can compare the effects of market volatilities on Ace Hardware and Pertamina Geothermal 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 Pertamina Geothermal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Pertamina Geothermal.
Diversification Opportunities for Ace Hardware and Pertamina Geothermal
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ace and Pertamina is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Pertamina Geothermal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pertamina Geothermal 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 Pertamina Geothermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pertamina Geothermal has no effect on the direction of Ace Hardware i.e., Ace Hardware and Pertamina Geothermal go up and down completely randomly.
Pair Corralation between Ace Hardware and Pertamina Geothermal
Assuming the 90 days trading horizon Ace Hardware is expected to generate 1.09 times less return on investment than Pertamina Geothermal. But when comparing it to its historical volatility, Ace Hardware Indonesia is 1.15 times less risky than Pertamina Geothermal. It trades about 0.03 of its potential returns per unit of risk. Pertamina Geothermal Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 81,498 in Pertamina Geothermal Energy on September 1, 2024 and sell it today you would earn a total of 17,502 from holding Pertamina Geothermal Energy or generate 21.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Ace Hardware Indonesia vs. Pertamina Geothermal Energy
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Pertamina Geothermal |
Ace Hardware and Pertamina Geothermal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Pertamina Geothermal
The main advantage of trading using opposite Ace Hardware and Pertamina Geothermal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Pertamina Geothermal 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 Pertamina Geothermal will offset losses from the drop in Pertamina Geothermal'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 |
| Pertamina Geothermal vs. Ashmore Asset Management | Pertamina Geothermal vs. HK Metals Utama | Pertamina Geothermal vs. Lotte Chemical Titan | Pertamina Geothermal vs. Diamond Food Indonesia |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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