Correlation Between PT Ace and KINGBOARD CHEMICAL

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

Diversification Opportunities for PT Ace and KINGBOARD CHEMICAL

-0.05

Correlation Coefficient

PT Ace  KINGBOARD CHEMICAL

Good diversification

The 3 months correlation between 4AH1 and KINGBOARD is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding PT Ace Hardware and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of PT Ace i.e., PT Ace and KINGBOARD CHEMICAL go up and down completely randomly.

Pair Corralation between PT Ace and KINGBOARD CHEMICAL

Assuming the 90 days trading horizon PT Ace is expected to generate 1.0 times less return on investment than KINGBOARD CHEMICAL. In addition to that, PT Ace is 1.83 times more volatile than KINGBOARD CHEMICAL. It trades about 0.06 of its total potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about 0.11 per unit of volatility. If you would invest  196.00  in KINGBOARD CHEMICAL on October 7, 2024 and sell it today you would earn a total of  30.00  from holding KINGBOARD CHEMICAL or generate 15.31% 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.  KINGBOARD CHEMICAL

PT Ace Hardware

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Ace Hardware are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, PT Ace reported solid returns over the last few months and may actually be approaching a breakup point.

KINGBOARD CHEMICAL

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KINGBOARD CHEMICAL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, KINGBOARD CHEMICAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PT Ace and KINGBOARD CHEMICAL

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

The idea behind PT Ace Hardware and KINGBOARD CHEMICAL 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.