Correlation Between PT Ace and Healthequity

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

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

Diversification Opportunities for PT Ace and Healthequity

0.24

Correlation Coefficient

PT Ace  Healthequity

Modest diversification

The 3 months correlation between 4AH1 and Healthequity is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PT Ace Hardware and Healthequity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthequity and PT Ace 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 PT Ace Hardware are associated (or correlated) with Healthequity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthequity has no effect on the direction of PT Ace i.e., PT Ace and Healthequity go up and down completely randomly.

Pair Corralation between PT Ace and Healthequity

Assuming the 90 days trading horizon PT Ace Hardware is expected to generate 5.43 times more return on investment than Healthequity. However, PT Ace is 5.43 times more volatile than Healthequity. It trades about 0.02 of its potential returns per unit of risk. Healthequity is currently generating about -0.05 per unit of risk. If you would invest  4.55  in PT Ace Hardware on December 25, 2024 and sell it today you would lose (1.55) from holding PT Ace Hardware or give up 34.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

PT Ace Hardware  vs.  Healthequity

PT Ace Hardware

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Ace Hardware are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, PT Ace reported solid returns over the last few months and may actually be approaching a breakup point.

Healthequity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Healthequity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic 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 PT Ace and Healthequity

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

The idea behind PT Ace Hardware and Healthequity 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.