Correlation Between United Tractors and Perusahaan Gas
Can any of the company-specific risk be diversified away by investing in both United Tractors and Perusahaan Gas 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 Perusahaan Gas 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 Perusahaan Gas Negara, you can compare the effects of market volatilities on United Tractors and Perusahaan Gas 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 Perusahaan Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Tractors and Perusahaan Gas.
Diversification Opportunities for United Tractors and Perusahaan Gas
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Perusahaan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and Perusahaan Gas Negara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perusahaan Gas Negara 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 Perusahaan Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perusahaan Gas Negara has no effect on the direction of United Tractors i.e., United Tractors and Perusahaan Gas go up and down completely randomly.
Pair Corralation between United Tractors and Perusahaan Gas
Assuming the 90 days trading horizon United Tractors Tbk is expected to generate 1.0 times more return on investment than Perusahaan Gas. However, United Tractors Tbk is 1.0 times less risky than Perusahaan Gas. It trades about 0.03 of its potential returns per unit of risk. Perusahaan Gas Negara is currently generating about 0.0 per unit of risk. If you would invest 2,701,760 in United Tractors Tbk on August 28, 2024 and sell it today you would earn a total of 48,240 from holding United Tractors Tbk or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Tractors Tbk vs. Perusahaan Gas Negara
Performance |
| Timeline |
| United Tractors Tbk |
| Perusahaan Gas Negara |
United Tractors and Perusahaan Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Tractors and Perusahaan Gas
The main advantage of trading using opposite United Tractors and Perusahaan Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Tractors position performs unexpectedly, Perusahaan Gas 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 Perusahaan Gas will offset losses from the drop in Perusahaan Gas' long position.The idea behind United Tractors Tbk and Perusahaan Gas Negara 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.| Perusahaan Gas vs. Aneka Tambang Persero | Perusahaan Gas vs. Bukit Asam Tbk | Perusahaan Gas vs. Telkom Indonesia Tbk | Perusahaan Gas vs. Astra International Tbk |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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