Correlation Between United Tractors and Centratama Telekomunikasi
Can any of the company-specific risk be diversified away by investing in both United Tractors and Centratama Telekomunikasi 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 Centratama Telekomunikasi 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 Centratama Telekomunikasi Ind, you can compare the effects of market volatilities on United Tractors and Centratama Telekomunikasi 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 Centratama Telekomunikasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Tractors and Centratama Telekomunikasi.
Diversification Opportunities for United Tractors and Centratama Telekomunikasi
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Centratama is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and Centratama Telekomunikasi Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centratama Telekomunikasi 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 Centratama Telekomunikasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centratama Telekomunikasi has no effect on the direction of United Tractors i.e., United Tractors and Centratama Telekomunikasi go up and down completely randomly.
Pair Corralation between United Tractors and Centratama Telekomunikasi
Assuming the 90 days trading horizon United Tractors Tbk is expected to generate 0.32 times more return on investment than Centratama Telekomunikasi. However, United Tractors Tbk is 3.14 times less risky than Centratama Telekomunikasi. It trades about 0.03 of its potential returns per unit of risk. Centratama Telekomunikasi Ind is currently generating about -0.09 per unit of risk. If you would invest 2,400,000 in United Tractors Tbk on February 3, 2024 and sell it today you would earn a total of 27,500 from holding United Tractors Tbk or generate 1.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United Tractors Tbk vs. Centratama Telekomunikasi Ind
Performance |
Timeline |
United Tractors Tbk |
Centratama Telekomunikasi |
United Tractors and Centratama Telekomunikasi Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Tractors and Centratama Telekomunikasi
The main advantage of trading using opposite United Tractors and Centratama Telekomunikasi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Tractors position performs unexpectedly, Centratama Telekomunikasi 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 Centratama Telekomunikasi will offset losses from the drop in Centratama Telekomunikasi's long position.United Tractors vs. PT MNC Energy | United Tractors vs. Tanah Laut Tbk | United Tractors vs. Indorama Synthetics Tbk | United Tractors vs. Fortune Mate Indonesia |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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