Correlation Between United Tractors and IGO
Can any of the company-specific risk be diversified away by investing in both United Tractors and IGO 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 United Tractors and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Tractors Tbk and IGO Limited, you can compare the effects of market volatilities on United Tractors and IGO 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 United Tractors with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Tractors and IGO.
Diversification Opportunities for United Tractors and IGO
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and IGO is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and United Tractors 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 United Tractors Tbk are associated (or correlated) with IGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGO Limited has no effect on the direction of United Tractors i.e., United Tractors and IGO go up and down completely randomly.
Pair Corralation between United Tractors and IGO
Assuming the 90 days horizon United Tractors Tbk is expected to generate 0.52 times more return on investment than IGO. However, United Tractors Tbk is 1.94 times less risky than IGO. It trades about 0.06 of its potential returns per unit of risk. IGO Limited is currently generating about -0.04 per unit of risk. If you would invest 2,591 in United Tractors Tbk on September 20, 2024 and sell it today you would earn a total of 669.00 from holding United Tractors Tbk or generate 25.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
United Tractors Tbk vs. IGO Limited
Performance |
| Timeline |
| United Tractors Tbk |
| IGO Limited |
United Tractors and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Tractors and IGO
The main advantage of trading using opposite United Tractors and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Tractors position performs unexpectedly, IGO 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 IGO will offset losses from the drop in IGO's long position.| United Tractors vs. Australian Strategic Materials | United Tractors vs. Iluka Resources Ltd | United Tractors vs. Boliden AB ADR | United Tractors vs. Eramet SA ADR |
| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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