Correlation Between Buana Finance and Ace Hardware
Can any of the company-specific risk be diversified away by investing in both Buana Finance 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 Buana Finance and Ace Hardware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buana Finance Tbk and Ace Hardware Indonesia, you can compare the effects of market volatilities on Buana Finance 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 Buana Finance with a short position of Ace Hardware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buana Finance and Ace Hardware.
Diversification Opportunities for Buana Finance and Ace Hardware
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Buana and Ace is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Buana Finance Tbk 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 Buana Finance 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 Buana Finance Tbk 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 Buana Finance i.e., Buana Finance and Ace Hardware go up and down completely randomly.
Pair Corralation between Buana Finance and Ace Hardware
Assuming the 90 days trading horizon Buana Finance is expected to generate 1.78 times less return on investment than Ace Hardware. In addition to that, Buana Finance is 1.27 times more volatile than Ace Hardware Indonesia. It trades about 0.03 of its total potential returns per unit of risk. Ace Hardware Indonesia is currently generating about 0.06 per unit of volatility. If you would invest 40,326 in Ace Hardware Indonesia on September 2, 2024 and sell it today you would earn a total of 36,674 from holding Ace Hardware Indonesia or generate 90.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buana Finance Tbk vs. Ace Hardware Indonesia
Performance |
| Timeline |
| Buana Finance Tbk |
| Ace Hardware Indonesia |
Buana Finance and Ace Hardware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buana Finance and Ace Hardware
The main advantage of trading using opposite Buana Finance and Ace Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buana Finance 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.| Buana Finance vs. Asuransi Ramayana Tbk | Buana Finance vs. Clipan Finance Indonesia | Buana Finance vs. Asuransi Bintang Tbk | Buana Finance vs. Asuransi Dayin Mitra |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |