Correlation Between United Rentals and Datang International
Can any of the company-specific risk be diversified away by investing in both United Rentals and Datang International 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 Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Datang International Power, you can compare the effects of market volatilities on United Rentals and Datang International 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 Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Datang International.
Diversification Opportunities for United Rentals and Datang International
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Datang is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International 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 Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of United Rentals i.e., United Rentals and Datang International go up and down completely randomly.
Pair Corralation between United Rentals and Datang International
Assuming the 90 days horizon United Rentals is expected to generate 1.47 times more return on investment than Datang International. However, United Rentals is 1.47 times more volatile than Datang International Power. It trades about 0.09 of its potential returns per unit of risk. Datang International Power is currently generating about -0.21 per unit of risk. If you would invest 75,569 in United Rentals on August 26, 2024 and sell it today you would earn a total of 4,291 from holding United Rentals or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Datang International Power
Performance |
| Timeline |
| United Rentals |
| Datang International |
United Rentals and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Datang International
The main advantage of trading using opposite United Rentals and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Datang International 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 Datang International will offset losses from the drop in Datang International's long position.| United Rentals vs. Superior Plus Corp | United Rentals vs. NMI Holdings | United Rentals vs. Origin Agritech | United Rentals vs. SIVERS SEMICONDUCTORS AB |
| Datang International vs. Lamar Advertising | Datang International vs. Coor Service Management | Datang International vs. United Rentals | Datang International vs. MUTUIONLINE |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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