Correlation Between United Rentals and Kingdee International
Can any of the company-specific risk be diversified away by investing in both United Rentals and Kingdee 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 Kingdee 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 Kingdee International Software, you can compare the effects of market volatilities on United Rentals and Kingdee 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 Kingdee International. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Kingdee International.
Diversification Opportunities for United Rentals and Kingdee International
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Kingdee is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Kingdee International Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingdee 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 Kingdee International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingdee International has no effect on the direction of United Rentals i.e., United Rentals and Kingdee International go up and down completely randomly.
Pair Corralation between United Rentals and Kingdee International
Assuming the 90 days horizon United Rentals is expected to generate 2.18 times less return on investment than Kingdee International. But when comparing it to its historical volatility, United Rentals is 1.31 times less risky than Kingdee International. It trades about 0.27 of its potential returns per unit of risk. Kingdee International Software is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 97.00 in Kingdee International Software on November 5, 2024 and sell it today you would earn a total of 28.00 from holding Kingdee International Software or generate 28.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Kingdee International Software
Performance |
| Timeline |
| United Rentals |
| Kingdee International |
United Rentals and Kingdee International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Kingdee International
The main advantage of trading using opposite United Rentals and Kingdee International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Kingdee 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 Kingdee International will offset losses from the drop in Kingdee International's long position.| United Rentals vs. GungHo Online Entertainment | United Rentals vs. Citic Telecom International | United Rentals vs. UNITED UTILITIES GR | United Rentals vs. CITIC Telecom International |
| Kingdee International vs. Mitsubishi Gas Chemical | Kingdee International vs. Eastman Chemical | Kingdee International vs. WisdomTree Investments | Kingdee International vs. Mitsui Chemicals |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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