Correlation Between PT Indofood and UNITED RENTALS
Can any of the company-specific risk be diversified away by investing in both PT Indofood 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 PT Indofood and UNITED RENTALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Indofood Sukses and UNITED RENTALS, you can compare the effects of market volatilities on PT Indofood 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 PT Indofood with a short position of UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and UNITED RENTALS.
Diversification Opportunities for PT Indofood and UNITED RENTALS
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ISM and UNITED is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS and PT Indofood 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 Indofood Sukses 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 PT Indofood i.e., PT Indofood and UNITED RENTALS go up and down completely randomly.
Pair Corralation between PT Indofood and UNITED RENTALS
Assuming the 90 days horizon PT Indofood Sukses is expected to under-perform the UNITED RENTALS. In addition to that, PT Indofood is 1.19 times more volatile than UNITED RENTALS. It trades about -0.02 of its total potential returns per unit of risk. UNITED RENTALS is currently generating about 0.17 per unit of volatility. If you would invest 74,970 in UNITED RENTALS on August 29, 2024 and sell it today you would earn a total of 7,050 from holding UNITED RENTALS or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. UNITED RENTALS
Performance |
| Timeline |
| PT Indofood Sukses |
| UNITED RENTALS |
PT Indofood and UNITED RENTALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and UNITED RENTALS
The main advantage of trading using opposite PT Indofood and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood 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's long position.| PT Indofood vs. Superior Plus Corp | PT Indofood vs. NMI Holdings | PT Indofood vs. Origin Agritech | PT Indofood vs. SIVERS SEMICONDUCTORS AB |
| UNITED RENTALS vs. Laureate Education | UNITED RENTALS vs. Darden Restaurants | UNITED RENTALS vs. MEDICAL FACILITIES NEW | UNITED RENTALS vs. ScanSource |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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