Correlation Between Metrodata Electronics and Ace Hardware
Can any of the company-specific risk be diversified away by investing in both Metrodata Electronics 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 Metrodata Electronics and Ace Hardware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metrodata Electronics Tbk and Ace Hardware Indonesia, you can compare the effects of market volatilities on Metrodata Electronics 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 Metrodata Electronics with a short position of Ace Hardware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrodata Electronics and Ace Hardware.
Diversification Opportunities for Metrodata Electronics and Ace Hardware
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Metrodata and Ace is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Metrodata Electronics Tbk 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 Metrodata Electronics 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 Metrodata Electronics Tbk 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 Metrodata Electronics i.e., Metrodata Electronics and Ace Hardware go up and down completely randomly.
Pair Corralation between Metrodata Electronics and Ace Hardware
Assuming the 90 days trading horizon Metrodata Electronics is expected to generate 2.89 times less return on investment than Ace Hardware. But when comparing it to its historical volatility, Metrodata Electronics Tbk is 1.5 times less risky than Ace Hardware. It trades about 0.03 of its potential returns per unit of risk. Ace Hardware Indonesia is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 42,159 in Ace Hardware Indonesia on August 27, 2024 and sell it today you would earn a total of 36,841 from holding Ace Hardware Indonesia or generate 87.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metrodata Electronics Tbk vs. Ace Hardware Indonesia
Performance |
| Timeline |
| Metrodata Electronics Tbk |
| Ace Hardware Indonesia |
Metrodata Electronics and Ace Hardware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metrodata Electronics and Ace Hardware
The main advantage of trading using opposite Metrodata Electronics and Ace Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrodata Electronics 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.| Metrodata Electronics vs. Multipolar Tbk | Metrodata Electronics vs. Astra Graphia Tbk | Metrodata Electronics vs. Matahari Putra Prima | Metrodata Electronics vs. Ramayana Lestari Sentosa |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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