Correlation Between United Airlines and Technos SA
Can any of the company-specific risk be diversified away by investing in both United Airlines and Technos SA 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 Airlines and Technos SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Airlines Holdings and Technos SA, you can compare the effects of market volatilities on United Airlines and Technos SA 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 Airlines with a short position of Technos SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Technos SA.
Diversification Opportunities for United Airlines and Technos SA
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Technos is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Technos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technos SA and United Airlines 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 Airlines Holdings are associated (or correlated) with Technos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technos SA has no effect on the direction of United Airlines i.e., United Airlines and Technos SA go up and down completely randomly.
Pair Corralation between United Airlines and Technos SA
Assuming the 90 days trading horizon United Airlines is expected to generate 1.03 times less return on investment than Technos SA. But when comparing it to its historical volatility, United Airlines Holdings is 1.17 times less risky than Technos SA. It trades about 0.09 of its potential returns per unit of risk. Technos SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 196.00 in Technos SA on September 19, 2024 and sell it today you would earn a total of 347.00 from holding Technos SA or generate 177.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
United Airlines Holdings vs. Technos SA
Performance |
| Timeline |
| United Airlines Holdings |
| Technos SA |
United Airlines and Technos SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Technos SA
The main advantage of trading using opposite United Airlines and Technos SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Technos SA 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 Technos SA will offset losses from the drop in Technos SA's long position.| United Airlines vs. SVB Financial Group | United Airlines vs. NXP Semiconductors NV | United Airlines vs. Fidelity National Information | United Airlines vs. Bank of America |
| Technos SA vs. Tupy SA | Technos SA vs. Engie Brasil Energia | Technos SA vs. Grendene SA | Technos SA vs. M Dias Branco |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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