Correlation Between Metro Healthcare and Ace Hardware
Can any of the company-specific risk be diversified away by investing in both Metro Healthcare 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 Metro Healthcare and Ace Hardware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Healthcare Indonesia and Ace Hardware Indonesia, you can compare the effects of market volatilities on Metro Healthcare 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 Metro Healthcare with a short position of Ace Hardware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Healthcare and Ace Hardware.
Diversification Opportunities for Metro Healthcare and Ace Hardware
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Metro and Ace is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Metro Healthcare 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 Metro Healthcare 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 Metro Healthcare 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 Metro Healthcare i.e., Metro Healthcare and Ace Hardware go up and down completely randomly.
Pair Corralation between Metro Healthcare and Ace Hardware
Assuming the 90 days trading horizon Metro Healthcare Indonesia is expected to generate 1.53 times more return on investment than Ace Hardware. However, Metro Healthcare is 1.53 times more volatile than Ace Hardware Indonesia. It trades about 0.42 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 13,000 in Metro Healthcare Indonesia on September 2, 2024 and sell it today you would earn a total of 4,100 from holding Metro Healthcare Indonesia or generate 31.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Healthcare Indonesia vs. Ace Hardware Indonesia
Performance |
| Timeline |
| Metro Healthcare Ind |
| Ace Hardware Indonesia |
Metro Healthcare and Ace Hardware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Healthcare and Ace Hardware
The main advantage of trading using opposite Metro Healthcare and Ace Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Healthcare 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.| Metro Healthcare vs. Medikaloka Hermina PT | Metro Healthcare vs. Sarana Meditama Metropolitan | Metro Healthcare vs. Mitra Keluarga Karyasehat | Metro Healthcare vs. Bhakti Multi Artha |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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