Correlation Between UNITED RENTALS and SK TELECOM
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and SK TELECOM 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 RENTALS and SK TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and SK TELECOM TDADR, you can compare the effects of market volatilities on UNITED RENTALS and SK TELECOM 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 RENTALS with a short position of SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and SK TELECOM.
Diversification Opportunities for UNITED RENTALS and SK TELECOM
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between UNITED and KMBA is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and SK TELECOM TDADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK TELECOM TDADR and UNITED RENTALS 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 RENTALS are associated (or correlated) with SK TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK TELECOM TDADR has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and SK TELECOM go up and down completely randomly.
Pair Corralation between UNITED RENTALS and SK TELECOM
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 0.88 times more return on investment than SK TELECOM. However, UNITED RENTALS is 1.14 times less risky than SK TELECOM. It trades about 0.17 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about 0.07 per unit of risk. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED RENTALS vs. SK TELECOM TDADR
Performance |
| Timeline |
| UNITED RENTALS |
| SK TELECOM TDADR |
UNITED RENTALS and SK TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and SK TELECOM
The main advantage of trading using opposite UNITED RENTALS and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, SK TELECOM 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 SK TELECOM will offset losses from the drop in SK TELECOM's long position.| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |