Correlation Between Ace Hardware and Verena Multi
Can any of the company-specific risk be diversified away by investing in both Ace Hardware and Verena Multi 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 Verena Multi 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 Verena Multi Finance, you can compare the effects of market volatilities on Ace Hardware and Verena Multi 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 Verena Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Hardware and Verena Multi.
Diversification Opportunities for Ace Hardware and Verena Multi
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ace and Verena is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ace Hardware Indonesia and Verena Multi Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verena Multi Finance 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 Verena Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verena Multi Finance has no effect on the direction of Ace Hardware i.e., Ace Hardware and Verena Multi go up and down completely randomly.
Pair Corralation between Ace Hardware and Verena Multi
Assuming the 90 days trading horizon Ace Hardware Indonesia is expected to under-perform the Verena Multi. In addition to that, Ace Hardware is 1.28 times more volatile than Verena Multi Finance. It trades about -0.31 of its total potential returns per unit of risk. Verena Multi Finance is currently generating about -0.12 per unit of volatility. If you would invest 9,200 in Verena Multi Finance on August 31, 2024 and sell it today you would lose (400.00) from holding Verena Multi Finance or give up 4.35% 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. Verena Multi Finance
Performance |
| Timeline |
| Ace Hardware Indonesia |
| Verena Multi Finance |
Ace Hardware and Verena Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Hardware and Verena Multi
The main advantage of trading using opposite Ace Hardware and Verena Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Hardware position performs unexpectedly, Verena Multi 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 Verena Multi will offset losses from the drop in Verena Multi'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 |
| Verena Multi vs. Bank BRISyariah Tbk | Verena Multi vs. Ace Hardware Indonesia | Verena Multi vs. Merdeka Copper Gold | Verena Multi vs. Mitra Pinasthika Mustika |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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