Correlation Between Bank Capital and Ace Hardware
Can any of the company-specific risk be diversified away by investing in both Bank Capital and Ace Hardware 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 Bank Capital and Ace Hardware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Capital Indonesia and Ace Hardware Indonesia, you can compare the effects of market volatilities on Bank Capital and Ace Hardware 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 Bank Capital with a short position of Ace Hardware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Capital and Ace Hardware.
Diversification Opportunities for Bank Capital and Ace Hardware
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Ace is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank Capital Indonesia and Ace Hardware Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ace Hardware Indonesia and Bank Capital 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 Bank Capital Indonesia are associated (or correlated) with Ace Hardware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ace Hardware Indonesia has no effect on the direction of Bank Capital i.e., Bank Capital and Ace Hardware go up and down completely randomly.
Pair Corralation between Bank Capital and Ace Hardware
Assuming the 90 days trading horizon Bank Capital Indonesia is expected to generate 0.52 times more return on investment than Ace Hardware. However, Bank Capital Indonesia is 1.92 times less risky than Ace Hardware. It trades about -0.03 of its potential returns per unit of risk. Ace Hardware Indonesia is currently generating about -0.34 per unit of risk. If you would invest 13,100 in Bank Capital Indonesia on September 2, 2024 and sell it today you would lose (100.00) from holding Bank Capital Indonesia or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Capital Indonesia vs. Ace Hardware Indonesia
Performance |
| Timeline |
| Bank Capital Indonesia |
| Ace Hardware Indonesia |
Bank Capital and Ace Hardware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Capital and Ace Hardware
The main advantage of trading using opposite Bank Capital and Ace Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Capital position performs unexpectedly, Ace Hardware 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 Ace Hardware will offset losses from the drop in Ace Hardware's long position.| Bank Capital vs. Ace Hardware Indonesia | Bank Capital vs. Merdeka Copper Gold | Bank Capital vs. Mitra Pinasthika Mustika | Bank Capital vs. Jakarta Int Hotels |
| Ace Hardware vs. Japfa Comfeed Indonesia | Ace Hardware vs. Charoen Pokphand Indonesia | Ace Hardware vs. Erajaya Swasembada Tbk | Ace Hardware vs. Indofood Cbp Sukses |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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