Correlation Between MAANSHAN IRON and United Rentals
Can any of the company-specific risk be diversified away by investing in both MAANSHAN IRON 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 MAANSHAN IRON and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAANSHAN IRON H and United Rentals, you can compare the effects of market volatilities on MAANSHAN IRON 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 MAANSHAN IRON with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAANSHAN IRON and United Rentals.
Diversification Opportunities for MAANSHAN IRON and United Rentals
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MAANSHAN and United is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding MAANSHAN IRON H and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and MAANSHAN IRON 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 MAANSHAN IRON H 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 MAANSHAN IRON i.e., MAANSHAN IRON and United Rentals go up and down completely randomly.
Pair Corralation between MAANSHAN IRON and United Rentals
Assuming the 90 days trading horizon MAANSHAN IRON H is expected to generate 2.34 times more return on investment than United Rentals. However, MAANSHAN IRON is 2.34 times more volatile than United Rentals. It trades about 0.23 of its potential returns per unit of risk. United Rentals is currently generating about 0.27 per unit of risk. If you would invest 16.00 in MAANSHAN IRON H on November 4, 2024 and sell it today you would earn a total of 4.00 from holding MAANSHAN IRON H or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAANSHAN IRON H vs. United Rentals
Performance |
| Timeline |
| MAANSHAN IRON H |
| United Rentals |
MAANSHAN IRON and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAANSHAN IRON and United Rentals
The main advantage of trading using opposite MAANSHAN IRON and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAANSHAN IRON 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.| MAANSHAN IRON vs. CVS Health | MAANSHAN IRON vs. EPSILON HEALTHCARE LTD | MAANSHAN IRON vs. Penta Ocean Construction Co | MAANSHAN IRON vs. North American Construction |
| United Rentals vs. GungHo Online Entertainment | United Rentals vs. Citic Telecom International | United Rentals vs. UNITED UTILITIES GR | United Rentals vs. CITIC Telecom International |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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