Correlation Between United Tractors and Indocement Tunggal
Can any of the company-specific risk be diversified away by investing in both United Tractors and Indocement Tunggal 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 Indocement Tunggal 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 Indocement Tunggal Prakarsa, you can compare the effects of market volatilities on United Tractors and Indocement Tunggal 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 Indocement Tunggal. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Tractors and Indocement Tunggal.
Diversification Opportunities for United Tractors and Indocement Tunggal
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Indocement is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and Indocement Tunggal Prakarsa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indocement Tunggal 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 Indocement Tunggal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indocement Tunggal has no effect on the direction of United Tractors i.e., United Tractors and Indocement Tunggal go up and down completely randomly.
Pair Corralation between United Tractors and Indocement Tunggal
Assuming the 90 days trading horizon United Tractors Tbk is expected to generate 0.98 times more return on investment than Indocement Tunggal. However, United Tractors Tbk is 1.03 times less risky than Indocement Tunggal. It trades about -0.08 of its potential returns per unit of risk. Indocement Tunggal Prakarsa is currently generating about -0.6 per unit of risk. If you would invest 2,557,500 in United Tractors Tbk on November 4, 2024 and sell it today you would lose (65,000) from holding United Tractors Tbk or give up 2.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Tractors Tbk vs. Indocement Tunggal Prakarsa
Performance |
| Timeline |
| United Tractors Tbk |
| Indocement Tunggal |
United Tractors and Indocement Tunggal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Tractors and Indocement Tunggal
The main advantage of trading using opposite United Tractors and Indocement Tunggal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Tractors position performs unexpectedly, Indocement Tunggal 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 Indocement Tunggal will offset losses from the drop in Indocement Tunggal's long position.| United Tractors vs. Resource Alam Indonesia | United Tractors vs. J Resources Asia | United Tractors vs. TBS Energi Utama | United Tractors vs. Rukun Raharja Tbk |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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