Correlation Between United Airlines and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both United Airlines and China BlueChemical 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 China BlueChemical 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 China BlueChemical, you can compare the effects of market volatilities on United Airlines and China BlueChemical 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 China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and China BlueChemical.
Diversification Opportunities for United Airlines and China BlueChemical
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and China is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical 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 China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of United Airlines i.e., United Airlines and China BlueChemical go up and down completely randomly.
Pair Corralation between United Airlines and China BlueChemical
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.71 times more return on investment than China BlueChemical. However, United Airlines Holdings is 1.41 times less risky than China BlueChemical. It trades about 0.25 of its potential returns per unit of risk. China BlueChemical is currently generating about 0.14 per unit of risk. If you would invest 9,384 in United Airlines Holdings on October 24, 2024 and sell it today you would earn a total of 1,126 from holding United Airlines Holdings or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. China BlueChemical
Performance |
| Timeline |
| United Airlines Holdings |
| China BlueChemical |
United Airlines and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and China BlueChemical
The main advantage of trading using opposite United Airlines and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, China BlueChemical 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 China BlueChemical will offset losses from the drop in China BlueChemical's long position.| United Airlines vs. Geely Automobile Holdings | United Airlines vs. ADRIATIC METALS LS 013355 | United Airlines vs. SOCKET MOBILE NEW | United Airlines vs. Osisko Metals |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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