Correlation Between United Tractors and City Retail
Can any of the company-specific risk be diversified away by investing in both United Tractors and City Retail 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 City Retail 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 City Retail Developments, you can compare the effects of market volatilities on United Tractors and City Retail 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 City Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Tractors and City Retail.
Diversification Opportunities for United Tractors and City Retail
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and City is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and City Retail Developments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Retail Developments 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 City Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Retail Developments has no effect on the direction of United Tractors i.e., United Tractors and City Retail go up and down completely randomly.
Pair Corralation between United Tractors and City Retail
Assuming the 90 days trading horizon United Tractors Tbk is expected to under-perform the City Retail. In addition to that, United Tractors is 3.43 times more volatile than City Retail Developments. It trades about -0.04 of its total potential returns per unit of risk. City Retail Developments is currently generating about 0.0 per unit of volatility. If you would invest 13,500 in City Retail Developments on September 2, 2024 and sell it today you would earn a total of 0.00 from holding City Retail Developments or generate 0.0% 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. City Retail Developments
Performance |
| Timeline |
| United Tractors Tbk |
| City Retail Developments |
United Tractors and City Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Tractors and City Retail
The main advantage of trading using opposite United Tractors and City Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Tractors position performs unexpectedly, City Retail 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 City Retail will offset losses from the drop in City Retail'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 |
| City Retail vs. Lippo Cikarang Tbk | City Retail vs. Lippo Karawaci Tbk | City Retail vs. Mitra Pinasthika Mustika | City Retail vs. Jakarta Int Hotels |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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