Correlation Between PT Ace and Transportadora

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

Diversification Opportunities for PT Ace and Transportadora

-0.74

Correlation Coefficient

PT Ace  Transportadora

Pay attention - limited upside

The 3 months correlation between 4AH1 and Transportadora is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding PT Ace Hardware and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of PT Ace i.e., PT Ace and Transportadora go up and down completely randomly.

Pair Corralation between PT Ace and Transportadora

Assuming the 90 days trading horizon PT Ace Hardware is expected to generate 1.37 times more return on investment than Transportadora. However, PT Ace is 1.37 times more volatile than Transportadora de Gas. It trades about 0.05 of its potential returns per unit of risk. Transportadora de Gas is currently generating about -0.05 per unit of risk. If you would invest  3.95  in PT Ace Hardware on September 25, 2024 and sell it today you would earn a total of  0.10  from holding PT Ace Hardware or generate 2.53% return on investment over 90 days.

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

PT Ace Hardware  vs.  Transportadora de Gas

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.

Transportadora de Gas

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking signals, Transportadora reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Ace and Transportadora

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

The idea behind PT Ace Hardware and Transportadora de Gas 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 Stocks Directory module to find actively traded stocks across global markets.