Correlation Between United Tractors and Commercial National

Can any of the company-specific risk be diversified away by investing in both United Tractors and Commercial National 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 Commercial National 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 Commercial National Financial, you can compare the effects of market volatilities on United Tractors and Commercial National 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 Commercial National. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Tractors and Commercial National.

Diversification Opportunities for United Tractors and Commercial National

-0.81

Correlation Coefficient

United Tractors  Commercial National

Pay attention - limited upside

The 3 months correlation between United and Commercial is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and Commercial National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial National 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 Commercial National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial National has no effect on the direction of United Tractors i.e., United Tractors and Commercial National go up and down completely randomly.

Pair Corralation between United Tractors and Commercial National

Assuming the 90 days horizon United Tractors is expected to generate 2.01 times less return on investment than Commercial National. In addition to that, United Tractors is 1.08 times more volatile than Commercial National Financial. It trades about 0.01 of its total potential returns per unit of risk. Commercial National Financial is currently generating about 0.03 per unit of volatility. If you would invest  929.00  in Commercial National Financial on December 2, 2024 and sell it today you would earn a total of  157.00  from holding Commercial National Financial or generate 16.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	69.7%
Values	Daily Returns

United Tractors Tbk  vs.  Commercial National Financial

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.

Commercial National

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial National Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Commercial National exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Tractors and Commercial National

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

The idea behind United Tractors Tbk and Commercial National Financial 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.