Correlation Between ACCSYS TECHPLC and UNITED RENTALS

Can any of the company-specific risk be diversified away by investing in both ACCSYS TECHPLC 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 ACCSYS TECHPLC and UNITED RENTALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ACCSYS TECHPLC EO and UNITED RENTALS, you can compare the effects of market volatilities on ACCSYS TECHPLC 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 ACCSYS TECHPLC with a short position of UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACCSYS TECHPLC and UNITED RENTALS.

Diversification Opportunities for ACCSYS TECHPLC and UNITED RENTALS

0.43

Correlation Coefficient

ACCSYS TECHPLC  UNITED RENTALS

Very weak diversification

The 3 months correlation between ACCSYS and UNITED is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ACCSYS TECHPLC EO and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS and ACCSYS TECHPLC 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 ACCSYS TECHPLC EO 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 ACCSYS TECHPLC i.e., ACCSYS TECHPLC and UNITED RENTALS go up and down completely randomly.

Pair Corralation between ACCSYS TECHPLC and UNITED RENTALS

Assuming the 90 days horizon ACCSYS TECHPLC EO is expected to under-perform the UNITED RENTALS. In addition to that, ACCSYS TECHPLC is 1.07 times more volatile than UNITED RENTALS. It trades about -0.08 of its total potential returns per unit of risk. UNITED RENTALS is currently generating about -0.02 per unit of volatility. If you would invest  76,168  in UNITED RENTALS on October 22, 2024 and sell it today you would lose (2,928) from holding UNITED RENTALS or give up 3.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ACCSYS TECHPLC EO  vs.  UNITED RENTALS

ACCSYS TECHPLC EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACCSYS TECHPLC EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

UNITED RENTALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED RENTALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, UNITED RENTALS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ACCSYS TECHPLC and UNITED RENTALS

The main advantage of trading using opposite ACCSYS TECHPLC and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACCSYS TECHPLC 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's long position.

The idea behind ACCSYS TECHPLC EO and UNITED RENTALS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.