Correlation Between Digital Mediatama and Ace Hardware
Can any of the company-specific risk be diversified away by investing in both Digital Mediatama 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 Digital Mediatama and Ace Hardware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Mediatama Maxima and Ace Hardware Indonesia, you can compare the effects of market volatilities on Digital Mediatama 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 Digital Mediatama with a short position of Ace Hardware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Mediatama and Ace Hardware.
Diversification Opportunities for Digital Mediatama and Ace Hardware
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Digital and Ace is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Digital Mediatama Maxima 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 Digital Mediatama 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 Digital Mediatama Maxima 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 Digital Mediatama i.e., Digital Mediatama and Ace Hardware go up and down completely randomly.
Pair Corralation between Digital Mediatama and Ace Hardware
Assuming the 90 days trading horizon Digital Mediatama Maxima is expected to under-perform the Ace Hardware. In addition to that, Digital Mediatama is 1.8 times more volatile than Ace Hardware Indonesia. It trades about -0.16 of its total potential returns per unit of risk. Ace Hardware Indonesia is currently generating about -0.19 per unit of volatility. If you would invest 81,000 in Ace Hardware Indonesia on October 22, 2024 and sell it today you would lose (5,500) from holding Ace Hardware Indonesia or give up 6.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Mediatama Maxima vs. Ace Hardware Indonesia
Performance |
| Timeline |
| Digital Mediatama Maxima |
| Ace Hardware Indonesia |
Digital Mediatama and Ace Hardware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Mediatama and Ace Hardware
The main advantage of trading using opposite Digital Mediatama and Ace Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Mediatama 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.| Digital Mediatama vs. Elang Mahkota Teknologi | Digital Mediatama vs. M Cash Integrasi | Digital Mediatama vs. Bank Artos Indonesia | Digital Mediatama vs. Bank Yudha Bhakti |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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