Correlation Between EVS Broadcast and PT Ace

Can any of the company-specific risk be diversified away by investing in both EVS Broadcast and PT Ace 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 EVS Broadcast and PT Ace into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EVS Broadcast Equipment and PT Ace Hardware, you can compare the effects of market volatilities on EVS Broadcast and PT Ace 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 EVS Broadcast with a short position of PT Ace. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVS Broadcast and PT Ace.

Diversification Opportunities for EVS Broadcast and PT Ace

-0.23

Correlation Coefficient

EVS Broadcast  PT Ace

Very good diversification

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

Pair Corralation between EVS Broadcast and PT Ace

Assuming the 90 days trading horizon EVS Broadcast is expected to generate 1.31 times less return on investment than PT Ace. But when comparing it to its historical volatility, EVS Broadcast Equipment is 5.94 times less risky than PT Ace. It trades about 0.23 of its potential returns per unit of risk. PT Ace Hardware is currently generating about 0.05 of returns per unit of risk over similar time horizon. 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

EVS Broadcast Equipment  vs.  PT Ace Hardware

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.

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.

Pair Trading with EVS Broadcast and PT Ace

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

The idea behind EVS Broadcast Equipment and PT Ace Hardware 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.