Correlation Between PT Ace and United Utilities
Can any of the company-specific risk be diversified away by investing in both PT Ace and United Utilities 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 United Utilities 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 United Utilities Group, you can compare the effects of market volatilities on PT Ace and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Ace and United Utilities.
Diversification Opportunities for PT Ace and United Utilities
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 4AH1 and United is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding PT Ace Hardware and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of PT Ace i.e., PT Ace and United Utilities go up and down completely randomly.
Pair Corralation between PT Ace and United Utilities
Assuming the 90 days trading horizon PT Ace Hardware is expected to under-perform the United Utilities. In addition to that, PT Ace is 3.24 times more volatile than United Utilities Group. It trades about -0.02 of its total potential returns per unit of risk. United Utilities Group is currently generating about 0.02 per unit of volatility. If you would invest 1,244 in United Utilities Group on September 26, 2024 and sell it today you would earn a total of 16.00 from holding United Utilities Group or generate 1.29% 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. United Utilities Group
Performance |
Timeline |
PT Ace Hardware |
United Utilities |
PT Ace and United Utilities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PT Ace and United Utilities
The main advantage of trading using opposite PT Ace and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Ace position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.PT Ace vs. Fortune Brands Home | PT Ace vs. Tempur Sealy International | PT Ace vs. Howden Joinery Group | PT Ace vs. Man Wah Holdings |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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