Correlation Between EMX Royalty and United Tractors

Can any of the company-specific risk be diversified away by investing in both EMX Royalty and United Tractors 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 EMX Royalty and United Tractors into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EMX Royalty Corp and United Tractors Tbk, you can compare the effects of market volatilities on EMX Royalty and United Tractors 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 EMX Royalty with a short position of United Tractors. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMX Royalty and United Tractors.

Diversification Opportunities for EMX Royalty and United Tractors

-0.38

Correlation Coefficient

EMX Royalty  United Tractors

Very good diversification

The 3 months correlation between EMX and United is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding EMX Royalty Corp and United Tractors Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Tractors Tbk and EMX Royalty 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 EMX Royalty Corp are associated (or correlated) with United Tractors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Tractors Tbk has no effect on the direction of EMX Royalty i.e., EMX Royalty and United Tractors go up and down completely randomly.

Pair Corralation between EMX Royalty and United Tractors

Considering the 90-day investment horizon EMX Royalty Corp is expected to generate 0.47 times more return on investment than United Tractors. However, EMX Royalty Corp is 2.11 times less risky than United Tractors. It trades about 0.14 of its potential returns per unit of risk. United Tractors Tbk is currently generating about -0.06 per unit of risk. If you would invest  167.00  in EMX Royalty Corp on December 19, 2024 and sell it today you would earn a total of  24.00  from holding EMX Royalty Corp or generate 14.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

EMX Royalty Corp  vs.  United Tractors Tbk

EMX Royalty Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMX Royalty Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, EMX Royalty showed solid returns over the last few months and may actually be approaching a breakup point.

United Tractors Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Tractors Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with EMX Royalty and United Tractors

The main advantage of trading using opposite EMX Royalty and United Tractors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMX Royalty position performs unexpectedly, United Tractors 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 United Tractors will offset losses from the drop in United Tractors' long position.

The idea behind EMX Royalty Corp and United Tractors 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.