Correlation Between United Airlines and Ganfeng Lithium
Can any of the company-specific risk be diversified away by investing in both United Airlines and Ganfeng Lithium 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 Ganfeng Lithium 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 Ganfeng Lithium Co, you can compare the effects of market volatilities on United Airlines and Ganfeng Lithium 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 Ganfeng Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Ganfeng Lithium.
Diversification Opportunities for United Airlines and Ganfeng Lithium
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Ganfeng is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Ganfeng Lithium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganfeng Lithium 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 Ganfeng Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganfeng Lithium has no effect on the direction of United Airlines i.e., United Airlines and Ganfeng Lithium go up and down completely randomly.
Pair Corralation between United Airlines and Ganfeng Lithium
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.58 times more return on investment than Ganfeng Lithium. However, United Airlines Holdings is 1.72 times less risky than Ganfeng Lithium. It trades about 0.09 of its potential returns per unit of risk. Ganfeng Lithium Co is currently generating about 0.01 per unit of risk. If you would invest 3,635 in United Airlines Holdings on September 12, 2024 and sell it today you would earn a total of 5,895 from holding United Airlines Holdings or generate 162.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Ganfeng Lithium Co
Performance |
| Timeline |
| United Airlines Holdings |
| Ganfeng Lithium |
United Airlines and Ganfeng Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Ganfeng Lithium
The main advantage of trading using opposite United Airlines and Ganfeng Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Ganfeng Lithium 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 Ganfeng Lithium will offset losses from the drop in Ganfeng Lithium's long position.| United Airlines vs. Zijin Mining Group | United Airlines vs. Highlight Communications AG | United Airlines vs. Grupo Carso SAB | United Airlines vs. GEELY AUTOMOBILE |
| Ganfeng Lithium vs. HEMISPHERE EGY | Ganfeng Lithium vs. United Airlines Holdings | Ganfeng Lithium vs. Cogent Communications Holdings | Ganfeng Lithium vs. SOUTHWEST 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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