Correlation Between United Airlines and Meituan ADR
Can any of the company-specific risk be diversified away by investing in both United Airlines and Meituan ADR 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 Meituan ADR 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 Meituan ADR, you can compare the effects of market volatilities on United Airlines and Meituan ADR 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 Meituan ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Meituan ADR.
Diversification Opportunities for United Airlines and Meituan ADR
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Meituan is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Meituan ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meituan ADR 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 Meituan ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meituan ADR has no effect on the direction of United Airlines i.e., United Airlines and Meituan ADR go up and down completely randomly.
Pair Corralation between United Airlines and Meituan ADR
Considering the 90-day investment horizon United Airlines Holdings is expected to generate 0.74 times more return on investment than Meituan ADR. However, United Airlines Holdings is 1.34 times less risky than Meituan ADR. It trades about 0.07 of its potential returns per unit of risk. Meituan ADR is currently generating about 0.02 per unit of risk. If you would invest 4,919 in United Airlines Holdings on November 2, 2024 and sell it today you would earn a total of 5,736 from holding United Airlines Holdings or generate 116.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
United Airlines Holdings vs. Meituan ADR
Performance |
| Timeline |
| United Airlines Holdings |
| Meituan ADR |
United Airlines and Meituan ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Meituan ADR
The main advantage of trading using opposite United Airlines and Meituan ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Meituan ADR 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 Meituan ADR will offset losses from the drop in Meituan ADR's long position.| United Airlines vs. American Airlines Group | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways Corp | United Airlines vs. Delta Air Lines |
| Meituan ADR vs. Jd Com Inc | Meituan ADR vs. MOGU Inc | Meituan ADR vs. Oriental Culture Holding | Meituan ADR vs. Alibaba Group Holding |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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