Correlation Between Howden Joinery and PT Ace
Can any of the company-specific risk be diversified away by investing in both Howden Joinery 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 Howden Joinery and PT Ace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Howden Joinery Group and PT Ace Hardware, you can compare the effects of market volatilities on Howden Joinery 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 Howden Joinery with a short position of PT Ace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Howden Joinery and PT Ace.
Diversification Opportunities for Howden Joinery and PT Ace
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Howden and 4AH1 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Howden Joinery Group 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 Howden Joinery 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 Howden Joinery Group 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 Howden Joinery i.e., Howden Joinery and PT Ace go up and down completely randomly.
Pair Corralation between Howden Joinery and PT Ace
Assuming the 90 days horizon Howden Joinery Group is expected to under-perform the PT Ace. But the stock apears to be less risky and, when comparing its historical volatility, Howden Joinery Group is 6.44 times less risky than PT Ace. The stock trades about -0.03 of its potential returns per unit of risk. The PT Ace Hardware is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.10 in PT Ace Hardware on September 26, 2024 and sell it today you would lose (0.05) from holding PT Ace Hardware or give up 1.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Howden Joinery Group vs. PT Ace Hardware
Performance |
Timeline |
Howden Joinery Group |
PT Ace Hardware |
Howden Joinery and PT Ace Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Howden Joinery and PT Ace
The main advantage of trading using opposite Howden Joinery and PT Ace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Howden Joinery 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.Howden Joinery vs. Fast Retailing Co | Howden Joinery vs. Singapore Telecommunications Limited | Howden Joinery vs. INTERSHOP Communications Aktiengesellschaft | Howden Joinery vs. JIAHUA STORES |
PT Ace vs. Fortune Brands Home | PT Ace vs. Tempur Sealy International | PT Ace vs. Howden Joinery Group | PT Ace vs. Man Wah Holdings |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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