Correlation Between Hero Supermarket and PT Verona
Can any of the company-specific risk be diversified away by investing in both Hero Supermarket and PT Verona 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 PT Verona 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 PT Verona Indah, you can compare the effects of market volatilities on Hero Supermarket and PT Verona 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 PT Verona. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hero Supermarket and PT Verona.
Diversification Opportunities for Hero Supermarket and PT Verona
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hero and VERN is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hero Supermarket Tbk and PT Verona Indah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Verona Indah 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 PT Verona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Verona Indah has no effect on the direction of Hero Supermarket i.e., Hero Supermarket and PT Verona go up and down completely randomly.
Pair Corralation between Hero Supermarket and PT Verona
Assuming the 90 days trading horizon Hero Supermarket Tbk is expected to generate 0.88 times more return on investment than PT Verona. However, Hero Supermarket Tbk is 1.14 times less risky than PT Verona. It trades about -0.09 of its potential returns per unit of risk. PT Verona Indah is currently generating about -0.17 per unit of risk. If you would invest 66,000 in Hero Supermarket Tbk on August 28, 2024 and sell it today you would lose (6,500) from holding Hero Supermarket Tbk or give up 9.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.33% |
| Values | Daily Returns |
Hero Supermarket Tbk vs. PT Verona Indah
Performance |
| Timeline |
| Hero Supermarket Tbk |
| PT Verona Indah |
Hero Supermarket and PT Verona Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hero Supermarket and PT Verona
The main advantage of trading using opposite Hero Supermarket and PT Verona positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hero Supermarket position performs unexpectedly, PT Verona 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 PT Verona will offset losses from the drop in PT Verona's long position.The idea behind Hero Supermarket Tbk and PT Verona Indah pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| PT Verona vs. Indosterling Technomedia Tbk | PT Verona vs. First Media Tbk | PT Verona vs. Ace Hardware Indonesia | PT Verona vs. Garuda Metalindo Tbk |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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