Correlation Between Unilever Indonesia and Hero Supermarket
Can any of the company-specific risk be diversified away by investing in both Unilever Indonesia and Hero Supermarket 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 Unilever Indonesia and Hero Supermarket into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever Indonesia Tbk and Hero Supermarket Tbk, you can compare the effects of market volatilities on Unilever Indonesia and Hero Supermarket 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 Unilever Indonesia with a short position of Hero Supermarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Indonesia and Hero Supermarket.
Diversification Opportunities for Unilever Indonesia and Hero Supermarket
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Unilever and Hero is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Indonesia Tbk and Hero Supermarket Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hero Supermarket Tbk and Unilever Indonesia 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 Unilever Indonesia Tbk are associated (or correlated) with Hero Supermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hero Supermarket Tbk has no effect on the direction of Unilever Indonesia i.e., Unilever Indonesia and Hero Supermarket go up and down completely randomly.
Pair Corralation between Unilever Indonesia and Hero Supermarket
Assuming the 90 days trading horizon Unilever Indonesia Tbk is expected to under-perform the Hero Supermarket. In addition to that, Unilever Indonesia is 1.16 times more volatile than Hero Supermarket Tbk. It trades about -0.13 of its total potential returns per unit of risk. Hero Supermarket Tbk is currently generating about -0.12 per unit of volatility. If you would invest 65,500 in Hero Supermarket Tbk on September 3, 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever Indonesia Tbk vs. Hero Supermarket Tbk
Performance |
| Timeline |
| Unilever Indonesia Tbk |
| Hero Supermarket Tbk |
Unilever Indonesia and Hero Supermarket Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever Indonesia and Hero Supermarket
The main advantage of trading using opposite Unilever Indonesia and Hero Supermarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever Indonesia position performs unexpectedly, Hero Supermarket 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 Hero Supermarket will offset losses from the drop in Hero Supermarket's long position.| Unilever Indonesia vs. PT Indofood Sukses | Unilever Indonesia vs. Astra International Tbk | Unilever Indonesia vs. Telkom Indonesia Tbk | Unilever Indonesia vs. Bank Central Asia |
| Hero Supermarket vs. Astra International Tbk | Hero Supermarket vs. Unilever Indonesia Tbk | Hero Supermarket vs. Telkom Indonesia Tbk | Hero Supermarket vs. Bank Mandiri Persero |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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