Correlation Between Garuda Metalindo and Ace Hardware
Can any of the company-specific risk be diversified away by investing in both Garuda Metalindo 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 Garuda Metalindo and Ace Hardware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garuda Metalindo Tbk and Ace Hardware Indonesia, you can compare the effects of market volatilities on Garuda Metalindo 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 Garuda Metalindo with a short position of Ace Hardware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garuda Metalindo and Ace Hardware.
Diversification Opportunities for Garuda Metalindo and Ace Hardware
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Garuda and Ace is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Garuda Metalindo 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 Garuda Metalindo 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 Garuda Metalindo 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 Garuda Metalindo i.e., Garuda Metalindo and Ace Hardware go up and down completely randomly.
Pair Corralation between Garuda Metalindo and Ace Hardware
Assuming the 90 days trading horizon Garuda Metalindo Tbk is expected to generate 1.05 times more return on investment than Ace Hardware. However, Garuda Metalindo is 1.05 times more volatile than Ace Hardware Indonesia. It trades about 0.32 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 105,500 in Garuda Metalindo Tbk on September 2, 2024 and sell it today you would earn a total of 16,500 from holding Garuda Metalindo Tbk or generate 15.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garuda Metalindo Tbk vs. Ace Hardware Indonesia
Performance |
| Timeline |
| Garuda Metalindo Tbk |
| Ace Hardware Indonesia |
Garuda Metalindo and Ace Hardware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garuda Metalindo and Ace Hardware
The main advantage of trading using opposite Garuda Metalindo and Ace Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garuda Metalindo 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.| Garuda Metalindo vs. Matahari Department Store | Garuda Metalindo vs. Multi Medika Internasional | Garuda Metalindo vs. Visi Media Asia | Garuda Metalindo vs. Bayan Resources Tbk |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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