Correlation Between PT Steel and United Rentals
Can any of the company-specific risk be diversified away by investing in both PT Steel 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 Steel 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 Steel Pipe and United Rentals, you can compare the effects of market volatilities on PT Steel 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 Steel with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Steel and United Rentals.
Diversification Opportunities for PT Steel and United Rentals
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between S08 and United is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding PT Steel Pipe and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and PT Steel 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 Steel Pipe 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 Steel i.e., PT Steel and United Rentals go up and down completely randomly.
Pair Corralation between PT Steel and United Rentals
Assuming the 90 days horizon PT Steel Pipe is expected to under-perform the United Rentals. In addition to that, PT Steel is 1.57 times more volatile than United Rentals. It trades about -0.03 of its total potential returns per unit of risk. United Rentals is currently generating about 0.05 per unit of volatility. If you would invest 66,427 in United Rentals on November 2, 2024 and sell it today you would earn a total of 6,773 from holding United Rentals or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Steel Pipe vs. United Rentals
Performance |
| Timeline |
| PT Steel Pipe |
| United Rentals |
PT Steel and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Steel and United Rentals
The main advantage of trading using opposite PT Steel and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Steel 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.| PT Steel vs. HANOVER INSURANCE | PT Steel vs. United Insurance Holdings | PT Steel vs. CITY OFFICE REIT | PT Steel vs. Corporate Office Properties |
| United Rentals vs. Siamgas And Petrochemicals | United Rentals vs. Sekisui Chemical Co | United Rentals vs. Shin Etsu Chemical Co | United Rentals vs. X FAB Silicon Foundries |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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