Correlation Between United Tractors and Tanke Biosciences

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

Diversification Opportunities for United Tractors and Tanke Biosciences

-0.34

Correlation Coefficient

United Tractors  Tanke Biosciences

Very good diversification

The 3 months correlation between United and Tanke is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and Tanke Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tanke Biosciences 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 Tanke Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tanke Biosciences has no effect on the direction of United Tractors i.e., United Tractors and Tanke Biosciences go up and down completely randomly.

Pair Corralation between United Tractors and Tanke Biosciences

Assuming the 90 days horizon United Tractors Tbk is expected to under-perform the Tanke Biosciences. But the pink sheet apears to be less risky and, when comparing its historical volatility, United Tractors Tbk is 8.15 times less risky than Tanke Biosciences. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Tanke Biosciences is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Tanke Biosciences on September 25, 2024 and sell it today you would earn a total of  1.00  from holding Tanke Biosciences or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

United Tractors Tbk  vs.  Tanke Biosciences

United Tractors Tbk

Risk-Adjusted Performance

0 of 100

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.

Tanke Biosciences

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tanke Biosciences are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental drivers, Tanke Biosciences demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Tractors and Tanke Biosciences

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

The idea behind United Tractors Tbk and Tanke Biosciences 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.