Correlation Between Hero Supermarket and Electronic City
Can any of the company-specific risk be diversified away by investing in both Hero Supermarket and Electronic City 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 Hero Supermarket and Electronic City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hero Supermarket Tbk and Electronic City Indonesia, you can compare the effects of market volatilities on Hero Supermarket and Electronic City 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 Hero Supermarket with a short position of Electronic City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hero Supermarket and Electronic City.
Diversification Opportunities for Hero Supermarket and Electronic City
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hero and Electronic is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hero Supermarket Tbk and Electronic City Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic City Indonesia and Hero Supermarket 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 Hero Supermarket Tbk are associated (or correlated) with Electronic City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic City Indonesia has no effect on the direction of Hero Supermarket i.e., Hero Supermarket and Electronic City go up and down completely randomly.
Pair Corralation between Hero Supermarket and Electronic City
Assuming the 90 days trading horizon Hero Supermarket Tbk is expected to generate 1.89 times more return on investment than Electronic City. However, Hero Supermarket is 1.89 times more volatile than Electronic City Indonesia. It trades about -0.01 of its potential returns per unit of risk. Electronic City Indonesia is currently generating about -0.04 per unit of risk. If you would invest 73,500 in Hero Supermarket Tbk on February 23, 2024 and sell it today you would lose (2,000) from holding Hero Supermarket Tbk or give up 2.72% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hero Supermarket Tbk vs. Electronic City Indonesia
Performance |
Timeline |
Hero Supermarket Tbk |
Electronic City Indonesia |
Hero Supermarket and Electronic City Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hero Supermarket and Electronic City
The main advantage of trading using opposite Hero Supermarket and Electronic City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hero Supermarket position performs unexpectedly, Electronic City 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 Electronic City will offset losses from the drop in Electronic City's long position.Hero Supermarket vs. Fast Food Indonesia | Hero Supermarket vs. Enseval Putra Megatrading | Hero Supermarket vs. Hexindo Adiperkasa Tbk | Hero Supermarket vs. Astra Graphia Tbk |
Electronic City vs. Lautan Luas Tbk | Electronic City vs. Mustika Ratu Tbk | Electronic City vs. Jakarta Int Hotels | Electronic City vs. Integra Indocabinet Tbk |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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