Correlation Between ROMERIKE SPAREBANK and PT Ace

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

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

Diversification Opportunities for ROMERIKE SPAREBANK and PT Ace

-0.29

Correlation Coefficient

ROMERIKE SPAREBANK  PT Ace

Very good diversification

The 3 months correlation between ROMERIKE and 4AH1 is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ROMERIKE SPAREBANK NK 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 ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK NK 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 ROMERIKE SPAREBANK i.e., ROMERIKE SPAREBANK and PT Ace go up and down completely randomly.

Pair Corralation between ROMERIKE SPAREBANK and PT Ace

Assuming the 90 days horizon ROMERIKE SPAREBANK is expected to generate 1.23 times less return on investment than PT Ace. But when comparing it to its historical volatility, ROMERIKE SPAREBANK NK is 15.21 times less risky than PT Ace. It trades about 0.27 of its potential returns per unit of risk. PT Ace Hardware is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4.55  in PT Ace Hardware on December 27, 2024 and sell it today you would lose (1.55) from holding PT Ace Hardware or give up 34.07% of portfolio value over 90 days.

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

ROMERIKE SPAREBANK NK  vs.  PT Ace Hardware

ROMERIKE SPAREBANK

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ROMERIKE SPAREBANK NK are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ROMERIKE SPAREBANK reported solid returns over the last few months and may actually be approaching a breakup point.

PT Ace Hardware

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Ace Hardware are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, PT Ace reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ROMERIKE SPAREBANK and PT Ace

The main advantage of trading using opposite ROMERIKE SPAREBANK and PT Ace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK NK 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.