Correlation Between Materialise and PT Ace

Can any of the company-specific risk be diversified away by investing in both Materialise and PT Ace 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 Materialise and PT Ace into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Materialise NV and PT Ace Hardware, you can compare the effects of market volatilities on Materialise and PT Ace 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 Materialise with a short position of PT Ace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and PT Ace.

Diversification Opportunities for Materialise and PT Ace

-0.68

Correlation Coefficient

Materialise  PT Ace

Excellent diversification

The 3 months correlation between Materialise and 4AH1 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and PT Ace Hardware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Ace Hardware and Materialise 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 Materialise NV are associated (or correlated) with PT Ace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Ace Hardware has no effect on the direction of Materialise i.e., Materialise and PT Ace go up and down completely randomly.

Pair Corralation between Materialise and PT Ace

Assuming the 90 days trading horizon Materialise NV is expected to generate 0.84 times more return on investment than PT Ace. However, Materialise NV is 1.19 times less risky than PT Ace. It trades about 0.18 of its potential returns per unit of risk. PT Ace Hardware is currently generating about -0.02 per unit of risk. If you would invest  456.00  in Materialise NV on October 6, 2024 and sell it today you would earn a total of  229.00  from holding Materialise NV or generate 50.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Materialise NV  vs.  PT Ace Hardware

Materialise NV

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

PT Ace Hardware

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Ace Hardware has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Materialise and PT Ace

The main advantage of trading using opposite Materialise and PT Ace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, PT Ace 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 Ace will offset losses from the drop in PT Ace's long position.

The idea behind Materialise NV and PT Ace Hardware 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.