Correlation Between AUST AGRICULTURAL and PT United

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

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

Diversification Opportunities for AUST AGRICULTURAL and PT United

-0.27

Correlation Coefficient

AUST AGRICULTURAL  PT United

Very good diversification

The 3 months correlation between AUST and UTY is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL and PT United Tractors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT United Tractors and AUST AGRICULTURAL 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 AUST AGRICULTURAL are associated (or correlated) with PT United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT United Tractors has no effect on the direction of AUST AGRICULTURAL i.e., AUST AGRICULTURAL and PT United go up and down completely randomly.

Pair Corralation between AUST AGRICULTURAL and PT United

Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to under-perform the PT United. But the stock apears to be less risky and, when comparing its historical volatility, AUST AGRICULTURAL is 3.21 times less risky than PT United. The stock trades about -0.03 of its potential returns per unit of risk. The PT United Tractors is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  145.00  in PT United Tractors on September 13, 2024 and sell it today you would earn a total of  12.00  from holding PT United Tractors or generate 8.28% return on investment over 90 days.

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

AUST AGRICULTURAL  vs.  PT United Tractors

AUST AGRICULTURAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AUST AGRICULTURAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AUST AGRICULTURAL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

PT United Tractors

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT United Tractors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT United may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AUST AGRICULTURAL and PT United

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

The idea behind AUST AGRICULTURAL and PT United Tractors 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.