Correlation Between United Tractors and Adaro Energy
Can any of the company-specific risk be diversified away by investing in both United Tractors and Adaro Energy 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 Adaro Energy 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 Adaro Energy Tbk, you can compare the effects of market volatilities on United Tractors and Adaro Energy 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 Adaro Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Tractors and Adaro Energy.
Diversification Opportunities for United Tractors and Adaro Energy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Adaro is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and Adaro Energy Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaro Energy Tbk 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 Adaro Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaro Energy Tbk has no effect on the direction of United Tractors i.e., United Tractors and Adaro Energy go up and down completely randomly.
Pair Corralation between United Tractors and Adaro Energy
Assuming the 90 days trading horizon United Tractors Tbk is expected to generate 0.73 times more return on investment than Adaro Energy. However, United Tractors Tbk is 1.36 times less risky than Adaro Energy. It trades about 0.05 of its potential returns per unit of risk. Adaro Energy Tbk is currently generating about -0.01 per unit of risk. If you would invest 1,907,287 in United Tractors Tbk on September 3, 2024 and sell it today you would earn a total of 770,213 from holding United Tractors Tbk or generate 40.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Tractors Tbk vs. Adaro Energy Tbk
Performance |
| Timeline |
| United Tractors Tbk |
| Adaro Energy Tbk |
United Tractors and Adaro Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Tractors and Adaro Energy
The main advantage of trading using opposite United Tractors and Adaro Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Tractors position performs unexpectedly, Adaro Energy 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 Adaro Energy will offset losses from the drop in Adaro Energy's long position.| United Tractors vs. Astra International Tbk | United Tractors vs. Bukit Asam Tbk | United Tractors vs. Semen Indonesia Persero | United Tractors vs. PT Indofood Sukses |
| Adaro Energy vs. Bukit Asam Tbk | Adaro Energy vs. Aneka Tambang Persero | Adaro Energy vs. Perusahaan Gas Negara | Adaro Energy vs. Indo Tambangraya Megah |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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