Correlation Between Ace Hardware and Ultra Jaya
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Ultra Jaya 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 Ultra Jaya 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 Ultra Jaya Milk, you can compare the effects of market volatilities on Ace Hardware and Ultra Jaya 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 Ultra Jaya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Ultra Jaya.
Diversification Opportunities for Ace Hardware and Ultra Jaya
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ace and Ultra is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Ultra Jaya Milk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Jaya Milk 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 Ultra Jaya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Jaya Milk has no effect on the direction of Ace Hardware i.e., Ace Hardware and Ultra Jaya go up and down completely randomly.
Pair Corralation between Ace Hardware and Ultra Jaya
Assuming the 90 days trading horizon Ace Hardware Indonesia is expected to under-perform the Ultra Jaya. In addition to that, Ace Hardware is 1.47 times more volatile than Ultra Jaya Milk. It trades about -0.27 of its total potential returns per unit of risk. Ultra Jaya Milk is currently generating about -0.21 per unit of volatility. If you would invest 186,000 in Ultra Jaya Milk on August 25, 2024 and sell it today you would lose (13,500) from holding Ultra Jaya Milk or give up 7.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ace Hardware Indonesia vs. Ultra Jaya Milk
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Ultra Jaya Milk |
Ace Hardware and Ultra Jaya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Ultra Jaya
The main advantage of trading using opposite Ace Hardware and Ultra Jaya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Ultra Jaya 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 Ultra Jaya will offset losses from the drop in Ultra Jaya'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 |
| Ultra Jaya vs. Mayora Indah Tbk | Ultra Jaya vs. Sido Muncul PT | Ultra Jaya vs. Indofood Cbp Sukses | Ultra Jaya vs. Ace Hardware 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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