Correlation Between KUBOTA CORP and PT United

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

By analyzing existing cross correlation between KUBOTA P ADR20 and PT United Tractors, you can compare the effects of market volatilities on KUBOTA CORP 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 KUBOTA CORP with a short position of PT United. Check out your portfolio center. Please also check ongoing floating volatility patterns of KUBOTA CORP and PT United.

Diversification Opportunities for KUBOTA CORP and PT United

-0.09

Correlation Coefficient

KUBOTA CORP  PT United

Good diversification

The 3 months correlation between KUBOTA and UTY is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding KUBOTA P ADR20 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 KUBOTA CORP 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 KUBOTA P ADR20 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 KUBOTA CORP i.e., KUBOTA CORP and PT United go up and down completely randomly.

Pair Corralation between KUBOTA CORP and PT United

Assuming the 90 days trading horizon KUBOTA P ADR20 is expected to under-perform the PT United. But the stock apears to be less risky and, when comparing its historical volatility, KUBOTA P ADR20 is 2.47 times less risky than PT United. The stock trades about -0.07 of its potential returns per unit of risk. The PT United Tractors is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  152.00  in PT United Tractors on September 3, 2024 and sell it today you would lose (1.00) from holding PT United Tractors or give up 0.66% of portfolio value over 90 days.

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

KUBOTA P ADR20  vs.  PT United Tractors

KUBOTA P ADR20

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KUBOTA P ADR20 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PT United Tractors

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT United Tractors are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PT United is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KUBOTA CORP and PT United

The main advantage of trading using opposite KUBOTA CORP and PT United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KUBOTA CORP 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 KUBOTA P ADR20 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.