Correlation Between Indofood Cbp and Ace Hardware
Can any of the company-specific risk be diversified away by investing in both Indofood Cbp 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 Indofood Cbp and Ace Hardware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indofood Cbp Sukses and Ace Hardware Indonesia, you can compare the effects of market volatilities on Indofood Cbp 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 Indofood Cbp with a short position of Ace Hardware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Cbp and Ace Hardware.
Diversification Opportunities for Indofood Cbp and Ace Hardware
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Indofood and Ace is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Cbp Sukses 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 Indofood Cbp 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 Indofood Cbp Sukses 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 Indofood Cbp i.e., Indofood Cbp and Ace Hardware go up and down completely randomly.
Pair Corralation between Indofood Cbp and Ace Hardware
Assuming the 90 days trading horizon Indofood Cbp Sukses is expected to generate 0.74 times more return on investment than Ace Hardware. However, Indofood Cbp Sukses is 1.35 times less risky than Ace Hardware. It trades about -0.17 of its potential returns per unit of risk. Ace Hardware Indonesia is currently generating about -0.29 per unit of risk. If you would invest 1,260,000 in Indofood Cbp Sukses on August 24, 2024 and sell it today you would lose (77,500) from holding Indofood Cbp Sukses or give up 6.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indofood Cbp Sukses vs. Ace Hardware Indonesia
Performance |
| Timeline |
| Indofood Cbp Sukses |
| Ace Hardware Indonesia |
Indofood Cbp and Ace Hardware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Cbp and Ace Hardware
The main advantage of trading using opposite Indofood Cbp and Ace Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Cbp 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.| Indofood Cbp vs. Unilever Indonesia Tbk | Indofood Cbp vs. PT Indofood Sukses | Indofood Cbp vs. Astra International Tbk | Indofood Cbp vs. Telkom Indonesia Tbk |
| Ace Hardware vs. Ricky Putra Globalindo | Ace Hardware vs. Asia Pacific Investama | Ace Hardware vs. Prima Alloy Steel |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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