Correlation Between Mesa Air and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Mesa Air and United Microelectronics 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 United Microelectronics 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 United Microelectronics, you can compare the effects of market volatilities on Mesa Air and United Microelectronics 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 United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and United Microelectronics.
Diversification Opportunities for Mesa Air and United Microelectronics
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mesa and United is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics 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 United Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Microelectronics has no effect on the direction of Mesa Air i.e., Mesa Air and United Microelectronics go up and down completely randomly.
Pair Corralation between Mesa Air and United Microelectronics
Given the investment horizon of 90 days Mesa Air Group is expected to generate 3.41 times more return on investment than United Microelectronics. However, Mesa Air is 3.41 times more volatile than United Microelectronics. It trades about 0.03 of its potential returns per unit of risk. United Microelectronics is currently generating about 0.02 per unit of risk. If you would invest 106.00 in Mesa Air Group on September 14, 2024 and sell it today you would earn a total of 1.00 from holding Mesa Air Group or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. United Microelectronics
Performance |
| Timeline |
| Mesa Air Group |
| United Microelectronics |
Mesa Air and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and United Microelectronics
The main advantage of trading using opposite Mesa Air and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, United Microelectronics 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 Microelectronics will offset losses from the drop in United Microelectronics' long position.| Mesa Air vs. Southwest Airlines | Mesa Air vs. United Airlines Holdings | Mesa Air vs. Frontier Group Holdings |
| United Microelectronics vs. Silicon Motion Technology | United Microelectronics vs. ASE Industrial Holding | United Microelectronics vs. ChipMOS Technologies | United Microelectronics vs. SemiLEDS |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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