Correlation Between United Tractors and Trilogy Metals

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

Diversification Opportunities for United Tractors and Trilogy Metals

-0.63

Correlation Coefficient

United Tractors  Trilogy Metals

Excellent diversification

The 3 months correlation between United and Trilogy is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and Trilogy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trilogy Metals 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 Trilogy Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trilogy Metals has no effect on the direction of United Tractors i.e., United Tractors and Trilogy Metals go up and down completely randomly.

Pair Corralation between United Tractors and Trilogy Metals

Assuming the 90 days horizon United Tractors Tbk is expected to under-perform the Trilogy Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, United Tractors Tbk is 1.53 times less risky than Trilogy Metals. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Trilogy Metals is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Trilogy Metals on December 21, 2024 and sell it today you would earn a total of  52.00  from holding Trilogy Metals or generate 47.27% 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.  Trilogy Metals

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.

Trilogy Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trilogy Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Trilogy Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Tractors and Trilogy Metals

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

The idea behind United Tractors Tbk and Trilogy Metals 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 Transaction History module to view history of all your transactions and understand their impact on performance.