Correlation Between PT Ace and EVS Broadcast

Can any of the company-specific risk be diversified away by investing in both PT Ace and EVS Broadcast 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 EVS Broadcast 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 EVS Broadcast Equipment, you can compare the effects of market volatilities on PT Ace and EVS Broadcast 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 EVS Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Ace and EVS Broadcast.

Diversification Opportunities for PT Ace and EVS Broadcast

-0.23

Correlation Coefficient

PT Ace  EVS Broadcast

Very good diversification

The 3 months correlation between 4AH1 and EVS is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding PT Ace Hardware and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment 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 EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of PT Ace i.e., PT Ace and EVS Broadcast go up and down completely randomly.

Pair Corralation between PT Ace and EVS Broadcast

Assuming the 90 days trading horizon PT Ace Hardware is expected to generate 7.17 times more return on investment than EVS Broadcast. However, PT Ace is 7.17 times more volatile than EVS Broadcast Equipment. It trades about 0.06 of its potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.06 per unit of risk. If you would invest  2.35  in PT Ace Hardware on September 25, 2024 and sell it today you would earn a total of  1.70  from holding PT Ace Hardware or generate 72.34% return on investment over 90 days.

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

PT Ace Hardware  vs.  EVS Broadcast Equipment

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 nearly stable technical indicators, PT Ace is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

EVS Broadcast Equipment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EVS Broadcast may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT Ace and EVS Broadcast

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

The idea behind PT Ace Hardware and EVS Broadcast Equipment 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.