Correlation Between United Rentals and Maeil Dairies

Can any of the company-specific risk be diversified away by investing in both United Rentals and Maeil Dairies 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 Maeil Dairies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Rentals and Maeil Dairies Co, you can compare the effects of market volatilities on United Rentals and Maeil Dairies 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 Maeil Dairies. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Maeil Dairies.

Diversification Opportunities for United Rentals and Maeil Dairies

-0.6

Correlation Coefficient

United Rentals  Maeil Dairies

Excellent diversification

The 3 months correlation between United and Maeil is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Maeil Dairies Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maeil Dairies 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 Maeil Dairies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maeil Dairies has no effect on the direction of United Rentals i.e., United Rentals and Maeil Dairies go up and down completely randomly.

Pair Corralation between United Rentals and Maeil Dairies

Considering the 90-day investment horizon United Rentals is expected to under-perform the Maeil Dairies. In addition to that, United Rentals is 2.09 times more volatile than Maeil Dairies Co. It trades about -0.05 of its total potential returns per unit of risk. Maeil Dairies Co is currently generating about 0.06 per unit of volatility. If you would invest  3,475,000  in Maeil Dairies Co on December 29, 2024 and sell it today you would earn a total of  120,000  from holding Maeil Dairies Co or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.72%
Values	Daily Returns

United Rentals  vs.  Maeil Dairies Co

United Rentals

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Rentals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Maeil Dairies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maeil Dairies Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Maeil Dairies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Rentals and Maeil Dairies

The main advantage of trading using opposite United Rentals and Maeil Dairies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Maeil Dairies 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 Maeil Dairies will offset losses from the drop in Maeil Dairies' long position.

The idea behind United Rentals and Maeil Dairies Co 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.