Correlation Between United Airlines and Zhihu
Can any of the company-specific risk be diversified away by investing in both United Airlines and Zhihu 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 Zhihu 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 Zhihu Inc ADR, you can compare the effects of market volatilities on United Airlines and Zhihu 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 Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Zhihu.
Diversification Opportunities for United Airlines and Zhihu
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Zhihu is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Zhihu Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhihu Inc 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 Zhihu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhihu Inc ADR has no effect on the direction of United Airlines i.e., United Airlines and Zhihu go up and down completely randomly.
Pair Corralation between United Airlines and Zhihu
Considering the 90-day investment horizon United Airlines Holdings is expected to generate 0.75 times more return on investment than Zhihu. However, United Airlines Holdings is 1.34 times less risky than Zhihu. It trades about 0.41 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about 0.03 per unit of risk. If you would invest 7,451 in United Airlines Holdings on August 25, 2024 and sell it today you would earn a total of 2,073 from holding United Airlines Holdings or generate 27.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Zhihu Inc ADR
Performance |
| Timeline |
| United Airlines Holdings |
| Zhihu Inc ADR |
United Airlines and Zhihu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Zhihu
The main advantage of trading using opposite United Airlines and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Zhihu 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 Zhihu will offset losses from the drop in Zhihu's long position.| United Airlines vs. Delta Air Lines | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways Corp | United Airlines vs. Spirit Airlines |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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