Correlation Between United Tractors and Ivanhoe Mines

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

Diversification Opportunities for United Tractors and Ivanhoe Mines

0.78

Correlation Coefficient

United Tractors  Ivanhoe Mines

Poor diversification

The 3 months correlation between United and Ivanhoe is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines 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 Ivanhoe Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Mines has no effect on the direction of United Tractors i.e., United Tractors and Ivanhoe Mines go up and down completely randomly.

Pair Corralation between United Tractors and Ivanhoe Mines

Assuming the 90 days horizon United Tractors Tbk is expected to generate 0.92 times more return on investment than Ivanhoe Mines. However, United Tractors Tbk is 1.09 times less risky than Ivanhoe Mines. It trades about -0.05 of its potential returns per unit of risk. Ivanhoe Mines is currently generating about -0.06 per unit of risk. If you would invest  3,147  in United Tractors Tbk on December 21, 2024 and sell it today you would lose (427.00) from holding United Tractors Tbk or give up 13.57% of portfolio value over 90 days.

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

United Tractors Tbk  vs.  Ivanhoe Mines

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 latest fragile performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ivanhoe Mines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ivanhoe Mines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with United Tractors and Ivanhoe Mines

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

The idea behind United Tractors Tbk and Ivanhoe Mines 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.