Correlation Between PT United and AGCO
Can any of the company-specific risk be diversified away by investing in both PT United and AGCO 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 PT United and AGCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT United Tractors and AGCO Corporation, you can compare the effects of market volatilities on PT United and AGCO 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 PT United with a short position of AGCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT United and AGCO.
Diversification Opportunities for PT United and AGCO
Significant diversification
The 3 months correlation between UTY and AGCO is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding PT United Tractors and AGCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGCO and PT United 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 PT United Tractors are associated (or correlated) with AGCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGCO has no effect on the direction of PT United i.e., PT United and AGCO go up and down completely randomly.
Pair Corralation between PT United and AGCO
Assuming the 90 days horizon PT United is expected to generate 9.37 times less return on investment than AGCO. But when comparing it to its historical volatility, PT United Tractors is 1.99 times less risky than AGCO. It trades about 0.03 of its potential returns per unit of risk. AGCO Corporation is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 9,011 in AGCO Corporation on September 3, 2024 and sell it today you would earn a total of 709.00 from holding AGCO Corporation or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT United Tractors vs. AGCO Corp.
Performance |
| Timeline |
| PT United Tractors |
| AGCO |
PT United and AGCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT United and AGCO
The main advantage of trading using opposite PT United and AGCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT United position performs unexpectedly, AGCO 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 AGCO will offset losses from the drop in AGCO's long position.| PT United vs. Komatsu | PT United vs. CNH Industrial NV | PT United vs. KUBOTA P ADR20 | PT United vs. AGCO Corporation |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |