Correlation Between PT Ace and MAROC TELECOM

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

Diversification Opportunities for PT Ace and MAROC TELECOM

0.47

Correlation Coefficient

PT Ace  MAROC TELECOM

Very weak diversification

The 3 months correlation between 4AH1 and MAROC is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding PT Ace Hardware and MAROC TELECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAROC TELECOM 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 MAROC TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAROC TELECOM has no effect on the direction of PT Ace i.e., PT Ace and MAROC TELECOM go up and down completely randomly.

Pair Corralation between PT Ace and MAROC TELECOM

Assuming the 90 days trading horizon PT Ace Hardware is expected to generate 1.87 times more return on investment than MAROC TELECOM. However, PT Ace is 1.87 times more volatile than MAROC TELECOM. It trades about 0.06 of its potential returns per unit of risk. MAROC TELECOM is currently generating about 0.06 per unit of risk. If you would invest  3.50  in PT Ace Hardware on September 17, 2024 and sell it today you would earn a total of  0.65  from holding PT Ace Hardware or generate 18.57% return on investment over 90 days.

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

PT Ace Hardware  vs.  MAROC TELECOM

PT Ace Hardware

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Ace Hardware are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, PT Ace may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MAROC TELECOM

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days MAROC TELECOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, MAROC TELECOM is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Ace and MAROC TELECOM

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

The idea behind PT Ace Hardware and MAROC TELECOM 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.