Correlation Between Chuangs China and United Rentals
Can any of the company-specific risk be diversified away by investing in both Chuangs China and United Rentals 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 Chuangs China and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chuangs China Investments and United Rentals, you can compare the effects of market volatilities on Chuangs China and United Rentals 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 Chuangs China with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and United Rentals.
Diversification Opportunities for Chuangs China and United Rentals
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chuangs and United is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Chuangs China 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 Chuangs China Investments are associated (or correlated) with United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of Chuangs China i.e., Chuangs China and United Rentals go up and down completely randomly.
Pair Corralation between Chuangs China and United Rentals
If you would invest 75,010 in United Rentals on August 29, 2024 and sell it today you would earn a total of 6,790 from holding United Rentals or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chuangs China Investments vs. United Rentals
Performance |
| Timeline |
| Chuangs China Investments |
| United Rentals |
Chuangs China and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and United Rentals
The main advantage of trading using opposite Chuangs China and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, United Rentals 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 United Rentals will offset losses from the drop in United Rentals' long position.| Chuangs China vs. Superior Plus Corp | Chuangs China vs. NMI Holdings | Chuangs China vs. Origin Agritech | Chuangs China vs. SIVERS SEMICONDUCTORS AB |
| United Rentals vs. 24SEVENOFFICE GROUP AB | United Rentals vs. Corporate Office Properties | United Rentals vs. MTI WIRELESS EDGE | United Rentals vs. CITY OFFICE REIT |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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