Correlation Between Mesa Air and The9
Can any of the company-specific risk be diversified away by investing in both Mesa Air and The9 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 Mesa Air and The9 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesa Air Group and The9 Ltd ADR, you can compare the effects of market volatilities on Mesa Air and The9 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 Mesa Air with a short position of The9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and The9.
Diversification Opportunities for Mesa Air and The9
Excellent diversification
The 3 months correlation between Mesa and The9 is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and The9 Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The9 Ltd ADR and Mesa Air 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 Mesa Air Group are associated (or correlated) with The9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The9 Ltd ADR has no effect on the direction of Mesa Air i.e., Mesa Air and The9 go up and down completely randomly.
Pair Corralation between Mesa Air and The9
Given the investment horizon of 90 days Mesa Air is expected to generate 2.21 times less return on investment than The9. But when comparing it to its historical volatility, Mesa Air Group is 1.04 times less risky than The9. It trades about 0.03 of its potential returns per unit of risk. The9 Ltd ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 740.00 in The9 Ltd ADR on September 1, 2024 and sell it today you would earn a total of 735.00 from holding The9 Ltd ADR or generate 99.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. The9 Ltd ADR
Performance |
| Timeline |
| Mesa Air Group |
| The9 Ltd ADR |
Mesa Air and The9 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and The9
The main advantage of trading using opposite Mesa Air and The9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, The9 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 The9 will offset losses from the drop in The9's long position.| Mesa Air vs. Canadian Pacific Railway | Mesa Air vs. Werner Enterprises | Mesa Air vs. Canadian National Railway | Mesa Air vs. CSX Corporation |
| The9 vs. Atari SA | The9 vs. Victory Square Technologies | The9 vs. Motorsport Gaming Us | The9 vs. Alpha Esports Tech |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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