Correlation Between United Rentals and Asia Precision
Can any of the company-specific risk be diversified away by investing in both United Rentals and Asia Precision 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 Asia Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Asia Precision Public, you can compare the effects of market volatilities on United Rentals and Asia Precision 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 Asia Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Asia Precision.
Diversification Opportunities for United Rentals and Asia Precision
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Asia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Asia Precision Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Precision Public 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 Asia Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Precision Public has no effect on the direction of United Rentals i.e., United Rentals and Asia Precision go up and down completely randomly.
Pair Corralation between United Rentals and Asia Precision
Considering the 90-day investment horizon United Rentals is expected to generate 0.5 times more return on investment than Asia Precision. However, United Rentals is 2.01 times less risky than Asia Precision. It trades about -0.05 of its potential returns per unit of risk. Asia Precision Public is currently generating about -0.08 per unit of risk. If you would invest 70,431 in United Rentals on December 28, 2024 and sell it today you would lose (5,839) from holding United Rentals or give up 8.29% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.36% |
Values | Daily Returns |
United Rentals vs. Asia Precision Public
Performance |
Timeline |
United Rentals |
Asia Precision Public |
United Rentals and Asia Precision Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and Asia Precision
The main advantage of trading using opposite United Rentals and Asia Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Asia Precision 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 Asia Precision will offset losses from the drop in Asia Precision's long position.United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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