Correlation Between Ace Hardware and Chandra Asri
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Chandra Asri 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 Chandra Asri 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 Chandra Asri Petrochemical, you can compare the effects of market volatilities on Ace Hardware and Chandra Asri 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 Chandra Asri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Chandra Asri.
Diversification Opportunities for Ace Hardware and Chandra Asri
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ace and Chandra is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Chandra Asri Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chandra Asri Petroch 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 Chandra Asri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chandra Asri Petroch has no effect on the direction of Ace Hardware i.e., Ace Hardware and Chandra Asri go up and down completely randomly.
Pair Corralation between Ace Hardware and Chandra Asri
Assuming the 90 days trading horizon Ace Hardware is expected to generate 3.34 times less return on investment than Chandra Asri. But when comparing it to its historical volatility, Ace Hardware Indonesia is 1.57 times less risky than Chandra Asri. It trades about 0.05 of its potential returns per unit of risk. Chandra Asri Petrochemical is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 203,875 in Chandra Asri Petrochemical on August 27, 2024 and sell it today you would earn a total of 438,625 from holding Chandra Asri Petrochemical or generate 215.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Ace Hardware Indonesia vs. Chandra Asri Petrochemical
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Chandra Asri Petroch |
Ace Hardware and Chandra Asri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Chandra Asri
The main advantage of trading using opposite Ace Hardware and Chandra Asri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Chandra Asri 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 Chandra Asri will offset losses from the drop in Chandra Asri'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 |
| Chandra Asri vs. Barito Pacific Tbk | Chandra Asri vs. Pabrik Kertas Tjiwi | Chandra Asri vs. Charoen Pokphand Indonesia | Chandra Asri vs. Indah Kiat Pulp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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