Correlation Between United Tractors and Mitrabahtera Segara

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

Diversification Opportunities for United Tractors and Mitrabahtera Segara

-0.1

Correlation Coefficient

United Tractors  Mitrabahtera Segara

Good diversification

The 3 months correlation between United and Mitrabahtera is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and Mitrabahtera Segara Sejati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitrabahtera Segara 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 Mitrabahtera Segara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitrabahtera Segara has no effect on the direction of United Tractors i.e., United Tractors and Mitrabahtera Segara go up and down completely randomly.

Pair Corralation between United Tractors and Mitrabahtera Segara

Assuming the 90 days trading horizon United Tractors Tbk is expected to generate 0.55 times more return on investment than Mitrabahtera Segara. However, United Tractors Tbk is 1.82 times less risky than Mitrabahtera Segara. It trades about 0.01 of its potential returns per unit of risk. Mitrabahtera Segara Sejati is currently generating about 0.0 per unit of risk. If you would invest  2,721,268  in United Tractors Tbk on August 31, 2024 and sell it today you would earn a total of  16,232  from holding United Tractors Tbk or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

United Tractors Tbk  vs.  Mitrabahtera Segara Sejati

United Tractors Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Tractors Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, United Tractors is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Mitrabahtera Segara

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Mitrabahtera Segara Sejati has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Mitrabahtera Segara is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with United Tractors and Mitrabahtera Segara

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

The idea behind United Tractors Tbk and Mitrabahtera Segara Sejati 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.