Correlation Between United Rentals and Medincell

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

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

Diversification Opportunities for United Rentals and Medincell

0.56

Correlation Coefficient

United Rentals  Medincell

Very weak diversification

The 3 months correlation between United and Medincell is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Medincell SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medincell SA 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 Medincell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medincell SA has no effect on the direction of United Rentals i.e., United Rentals and Medincell go up and down completely randomly.

Pair Corralation between United Rentals and Medincell

Considering the 90-day investment horizon United Rentals is expected to generate 0.9 times more return on investment than Medincell. However, United Rentals is 1.11 times less risky than Medincell. It trades about -0.05 of its potential returns per unit of risk. Medincell SA is currently generating about -0.06 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	Weak
Accuracy	95.24%
Values	Daily Returns

United Rentals  vs.  Medincell SA

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.

Medincell SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medincell SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with United Rentals and Medincell

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

The idea behind United Rentals and Medincell SA 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.