Correlation Between Ivanhoe Mines and United Tractors

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

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

Diversification Opportunities for Ivanhoe Mines and United Tractors

0.46

Correlation Coefficient

Ivanhoe Mines  United Tractors

Very weak diversification

The 3 months correlation between Ivanhoe and United is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Mines 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 Ivanhoe Mines 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 Ivanhoe Mines 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 Ivanhoe Mines i.e., Ivanhoe Mines and United Tractors go up and down completely randomly.

Pair Corralation between Ivanhoe Mines and United Tractors

Assuming the 90 days horizon Ivanhoe Mines is expected to under-perform the United Tractors. But the otc stock apears to be less risky and, when comparing its historical volatility, Ivanhoe Mines is 1.78 times less risky than United Tractors. The otc stock trades about -0.3 of its potential returns per unit of risk. The United Tractors Tbk is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  3,580  in United Tractors Tbk on October 9, 2024 and sell it today you would lose (280.00) from holding United Tractors Tbk or give up 7.82% of portfolio value over 90 days.

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

Ivanhoe Mines  vs.  United Tractors Tbk

Ivanhoe Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivanhoe Mines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

United Tractors Tbk

Risk-Adjusted Performance

0 of 100

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 fairly strong forward-looking signals, United Tractors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ivanhoe Mines and United Tractors

The main advantage of trading using opposite Ivanhoe Mines and United Tractors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Mines 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 Ivanhoe Mines 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..