Correlation Between PT Ace and Polski Koncern

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

Diversification Opportunities for PT Ace and Polski Koncern

0.31

Correlation Coefficient

PT Ace  Polski Koncern

Weak diversification

The 3 months correlation between 4AH1 and Polski is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PT Ace Hardware and Polski Koncern Naftowy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polski Koncern Naftowy 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 Polski Koncern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polski Koncern Naftowy has no effect on the direction of PT Ace i.e., PT Ace and Polski Koncern go up and down completely randomly.

Pair Corralation between PT Ace and Polski Koncern

Assuming the 90 days trading horizon PT Ace Hardware is expected to generate 3.45 times more return on investment than Polski Koncern. However, PT Ace is 3.45 times more volatile than Polski Koncern Naftowy. It trades about 0.11 of its potential returns per unit of risk. Polski Koncern Naftowy is currently generating about -0.09 per unit of risk. If you would invest  3.85  in PT Ace Hardware on October 5, 2024 and sell it today you would earn a total of  0.45  from holding PT Ace Hardware or generate 11.69% return on investment over 90 days.

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

PT Ace Hardware  vs.  Polski Koncern Naftowy

PT Ace Hardware

Risk-Adjusted Performance

0 of 100

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.

Polski Koncern Naftowy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polski Koncern Naftowy 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 Polski Koncern

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

The idea behind PT Ace Hardware and Polski Koncern Naftowy 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.