Correlation Between Harum Energy and United Tractors
Can any of the company-specific risk be diversified away by investing in both Harum Energy and United Tractors 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 Harum Energy and United Tractors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harum Energy Tbk and United Tractors Tbk, you can compare the effects of market volatilities on Harum Energy and United Tractors 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 Harum Energy with a short position of United Tractors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harum Energy and United Tractors.
Diversification Opportunities for Harum Energy and United Tractors
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harum and United is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Harum Energy Tbk and United Tractors Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Tractors Tbk and Harum Energy 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 Harum Energy Tbk are associated (or correlated) with United Tractors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Tractors Tbk has no effect on the direction of Harum Energy i.e., Harum Energy and United Tractors go up and down completely randomly.
Pair Corralation between Harum Energy and United Tractors
Assuming the 90 days trading horizon Harum Energy Tbk is expected to under-perform the United Tractors. In addition to that, Harum Energy is 1.08 times more volatile than United Tractors Tbk. It trades about -0.2 of its total potential returns per unit of risk. United Tractors Tbk is currently generating about 0.07 per unit of volatility. If you would invest 2,680,000 in United Tractors Tbk on August 28, 2024 and sell it today you would earn a total of 70,000 from holding United Tractors Tbk or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harum Energy Tbk vs. United Tractors Tbk
Performance |
| Timeline |
| Harum Energy Tbk |
| United Tractors Tbk |
Harum Energy and United Tractors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harum Energy and United Tractors
The main advantage of trading using opposite Harum Energy and United Tractors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harum Energy position performs unexpectedly, United Tractors 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 Tractors will offset losses from the drop in United Tractors' long position.| Harum Energy vs. Indo Tambangraya Megah | Harum Energy vs. Indika Energy Tbk | Harum Energy vs. Adaro Energy Tbk | Harum Energy vs. Akr Corporindo 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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