Correlation Between Meta Epsi and Ace Hardware
Can any of the company-specific risk be diversified away by investing in both Meta Epsi 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 Meta Epsi and Ace Hardware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Epsi Tbk and Ace Hardware Indonesia, you can compare the effects of market volatilities on Meta Epsi 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 Meta Epsi with a short position of Ace Hardware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Epsi and Ace Hardware.
Diversification Opportunities for Meta Epsi and Ace Hardware
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Meta and Ace is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Meta Epsi 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 Meta Epsi 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 Meta Epsi 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 Meta Epsi i.e., Meta Epsi and Ace Hardware go up and down completely randomly.
Pair Corralation between Meta Epsi and Ace Hardware
Assuming the 90 days trading horizon Meta Epsi Tbk is expected to generate 2.58 times more return on investment than Ace Hardware. However, Meta Epsi is 2.58 times more volatile than Ace Hardware Indonesia. It trades about 0.03 of its potential returns per unit of risk. Ace Hardware Indonesia is currently generating about -0.01 per unit of risk. If you would invest 1,200 in Meta Epsi Tbk on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Meta Epsi Tbk or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Epsi Tbk vs. Ace Hardware Indonesia
Performance |
| Timeline |
| Meta Epsi Tbk |
| Ace Hardware Indonesia |
Meta Epsi and Ace Hardware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Epsi and Ace Hardware
The main advantage of trading using opposite Meta Epsi and Ace Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Epsi 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.| Meta Epsi vs. PP Presisi Tbk | Meta Epsi vs. Bima Sakti Pertiwi | Meta Epsi vs. Nusantara Almazia | Meta Epsi vs. Megapower Makmur TBK |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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