Correlation Between United Rentals and Citra Marga

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

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

Diversification Opportunities for United Rentals and Citra Marga

-0.71

Correlation Coefficient

United Rentals  Citra Marga

Pay attention - limited upside

The 3 months correlation between United and Citra is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Citra Marga Nusaphala in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citra Marga Nusaphala 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 Citra Marga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citra Marga Nusaphala has no effect on the direction of United Rentals i.e., United Rentals and Citra Marga go up and down completely randomly.

Pair Corralation between United Rentals and Citra Marga

Considering the 90-day investment horizon United Rentals is expected to generate 2.56 times more return on investment than Citra Marga. However, United Rentals is 2.56 times more volatile than Citra Marga Nusaphala. It trades about 0.19 of its potential returns per unit of risk. Citra Marga Nusaphala is currently generating about -0.2 per unit of risk. If you would invest  69,621  in United Rentals on September 5, 2024 and sell it today you would earn a total of  17,203  from holding United Rentals or generate 24.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

United Rentals  vs.  Citra Marga Nusaphala

United Rentals

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, United Rentals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Citra Marga Nusaphala

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citra Marga Nusaphala has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with United Rentals and Citra Marga

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

The idea behind United Rentals and Citra Marga Nusaphala 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.