Correlation Between Hero Supermarket and Fast Food
Can any of the company-specific risk be diversified away by investing in both Hero Supermarket and Fast Food 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 Hero Supermarket and Fast Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hero Supermarket Tbk and Fast Food Indonesia, you can compare the effects of market volatilities on Hero Supermarket and Fast Food 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 Hero Supermarket with a short position of Fast Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hero Supermarket and Fast Food.
Diversification Opportunities for Hero Supermarket and Fast Food
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hero and Fast is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hero Supermarket Tbk and Fast Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Food Indonesia and Hero Supermarket 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 Hero Supermarket Tbk are associated (or correlated) with Fast Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Food Indonesia has no effect on the direction of Hero Supermarket i.e., Hero Supermarket and Fast Food go up and down completely randomly.
Pair Corralation between Hero Supermarket and Fast Food
Assuming the 90 days trading horizon Hero Supermarket Tbk is expected to generate 0.64 times more return on investment than Fast Food. However, Hero Supermarket Tbk is 1.55 times less risky than Fast Food. It trades about -0.3 of its potential returns per unit of risk. Fast Food Indonesia is currently generating about -0.41 per unit of risk. If you would invest 65,500 in Hero Supermarket Tbk on August 29, 2024 and sell it today you would lose (8,500) from holding Hero Supermarket Tbk or give up 12.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hero Supermarket Tbk vs. Fast Food Indonesia
Performance |
| Timeline |
| Hero Supermarket Tbk |
| Fast Food Indonesia |
Hero Supermarket and Fast Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hero Supermarket and Fast Food
The main advantage of trading using opposite Hero Supermarket and Fast Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hero Supermarket position performs unexpectedly, Fast Food 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 Fast Food will offset losses from the drop in Fast Food's long position.| Hero Supermarket vs. Fast Food Indonesia | Hero Supermarket vs. Enseval Putra Megatrading | Hero Supermarket vs. Matahari Putra Prima | Hero Supermarket vs. Hexindo Adiperkasa Tbk |
| Fast Food vs. Hero Supermarket Tbk | Fast Food vs. Indoritel Makmur Internasional | Fast Food vs. Enseval Putra Megatrading | Fast Food vs. Fks Multi Agro |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |