Correlation Between PT United and CarsalesCom

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

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

Diversification Opportunities for PT United and CarsalesCom

0.42

Correlation Coefficient

PT United  CarsalesCom

Very weak diversification

The 3 months correlation between UTY and CarsalesCom is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding PT United Tractors and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom and PT United 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 PT United Tractors are associated (or correlated) with CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of PT United i.e., PT United and CarsalesCom go up and down completely randomly.

Pair Corralation between PT United and CarsalesCom

Assuming the 90 days horizon PT United Tractors is expected to generate 2.42 times more return on investment than CarsalesCom. However, PT United is 2.42 times more volatile than CarsalesCom. It trades about 0.05 of its potential returns per unit of risk. CarsalesCom is currently generating about 0.1 per unit of risk. 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

PT United Tractors  vs.  CarsalesCom

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.

CarsalesCom

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CarsalesCom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT United and CarsalesCom

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

The idea behind PT United Tractors and CarsalesCom 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..