Correlation Between China Aircraft and United Rentals

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

By analyzing existing cross correlation between China Aircraft Leasing and United Rentals, you can compare the effects of market volatilities on China Aircraft and United Rentals 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 China Aircraft with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and United Rentals.

Diversification Opportunities for China Aircraft and United Rentals

-0.3

Correlation Coefficient

China Aircraft  United Rentals

Very good diversification

The 3 months correlation between China and United is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and China Aircraft 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 China Aircraft Leasing are associated (or correlated) with United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of China Aircraft i.e., China Aircraft and United Rentals go up and down completely randomly.

Pair Corralation between China Aircraft and United Rentals

If you would invest  43.00  in China Aircraft Leasing on February 1, 2024 and sell it today you would earn a total of  0.00  from holding China Aircraft Leasing or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China Aircraft Leasing  vs.  United Rentals

China Aircraft Leasing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Aircraft Leasing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, China Aircraft is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

United Rentals

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, United Rentals is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with China Aircraft and United Rentals

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

The idea behind China Aircraft Leasing and United Rentals 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.