Correlation Between United Tractors and Jasa Marga
Can any of the company-specific risk be diversified away by investing in both United Tractors and Jasa Marga 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 Jasa Marga 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 Jasa Marga Tbk, you can compare the effects of market volatilities on United Tractors and Jasa Marga 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 Jasa Marga. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Tractors and Jasa Marga.
Diversification Opportunities for United Tractors and Jasa Marga
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Jasa is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and Jasa Marga Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jasa Marga 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 Jasa Marga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jasa Marga Tbk has no effect on the direction of United Tractors i.e., United Tractors and Jasa Marga go up and down completely randomly.
Pair Corralation between United Tractors and Jasa Marga
Assuming the 90 days trading horizon United Tractors Tbk is expected to generate 1.59 times more return on investment than Jasa Marga. However, United Tractors is 1.59 times more volatile than Jasa Marga Tbk. It trades about 0.07 of its potential returns per unit of risk. Jasa Marga Tbk is currently generating about 0.02 per unit of risk. 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 |
United Tractors Tbk vs. Jasa Marga Tbk
Performance |
| Timeline |
| United Tractors Tbk |
| Jasa Marga Tbk |
United Tractors and Jasa Marga Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Tractors and Jasa Marga
The main advantage of trading using opposite United Tractors and Jasa Marga positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Tractors position performs unexpectedly, Jasa Marga 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 Jasa Marga will offset losses from the drop in Jasa Marga's long position.The idea behind United Tractors Tbk and Jasa Marga Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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