Correlation Between United Rentals and Exploitasi Energi

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

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

Diversification Opportunities for United Rentals and Exploitasi Energi

-0.57

Correlation Coefficient

United Rentals  Exploitasi Energi

Excellent diversification

The 3 months correlation between United and Exploitasi is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Exploitasi Energi Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exploitasi Energi 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 Exploitasi Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exploitasi Energi has no effect on the direction of United Rentals i.e., United Rentals and Exploitasi Energi go up and down completely randomly.

Pair Corralation between United Rentals and Exploitasi Energi

Considering the 90-day investment horizon United Rentals is expected to generate 0.21 times more return on investment than Exploitasi Energi. However, United Rentals is 4.82 times less risky than Exploitasi Energi. It trades about 0.19 of its potential returns per unit of risk. Exploitasi Energi Indonesia is currently generating about 0.0 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	Very Weak
Accuracy	98.44%
Values	Daily Returns

United Rentals  vs.  Exploitasi Energi Indonesia

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.

Exploitasi Energi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exploitasi Energi Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Exploitasi Energi is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with United Rentals and Exploitasi Energi

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

The idea behind United Rentals and Exploitasi Energi Indonesia 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 Valuation module to check real value of public entities based on technical and fundamental data.