Correlation Between United Tractors and Hotel Fitra

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

Diversification Opportunities for United Tractors and Hotel Fitra

-0.55

Correlation Coefficient

United Tractors  Hotel Fitra

Excellent diversification

The 3 months correlation between United and Hotel is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and Hotel Fitra International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Fitra International 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 Hotel Fitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Fitra International has no effect on the direction of United Tractors i.e., United Tractors and Hotel Fitra go up and down completely randomly.

Pair Corralation between United Tractors and Hotel Fitra

Assuming the 90 days trading horizon United Tractors Tbk is expected to generate 1.6 times more return on investment than Hotel Fitra. However, United Tractors is 1.6 times more volatile than Hotel Fitra International. It trades about 0.09 of its potential returns per unit of risk. Hotel Fitra International is currently generating about -0.08 per unit of risk. If you would invest  2,601,785  in United Tractors Tbk on September 15, 2024 and sell it today you would earn a total of  200,715  from holding United Tractors Tbk or generate 7.71% return on investment over 90 days.

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

United Tractors Tbk  vs.  Hotel Fitra International

United Tractors Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Tractors Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, United Tractors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hotel Fitra International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotel Fitra International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Hotel Fitra 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 Hotel Fitra

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

The idea behind United Tractors Tbk and Hotel Fitra International 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..