Correlation Between United Airlines and PT Indosat
Can any of the company-specific risk be diversified away by investing in both United Airlines and PT Indosat 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 PT Indosat 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 PT Indosat Tbk, you can compare the effects of market volatilities on United Airlines and PT Indosat 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 PT Indosat. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and PT Indosat.
Diversification Opportunities for United Airlines and PT Indosat
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and IDO1 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and PT Indosat Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indosat Tbk 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 PT Indosat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indosat Tbk has no effect on the direction of United Airlines i.e., United Airlines and PT Indosat go up and down completely randomly.
Pair Corralation between United Airlines and PT Indosat
Assuming the 90 days trading horizon United Airlines is expected to generate 3.04 times less return on investment than PT Indosat. But when comparing it to its historical volatility, United Airlines Holdings is 5.16 times less risky than PT Indosat. It trades about 0.21 of its potential returns per unit of risk. PT Indosat Tbk is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 13.00 in PT Indosat Tbk on October 12, 2024 and sell it today you would earn a total of 2.00 from holding PT Indosat Tbk or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. PT Indosat Tbk
Performance |
| Timeline |
| United Airlines Holdings |
| PT Indosat Tbk |
United Airlines and PT Indosat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and PT Indosat
The main advantage of trading using opposite United Airlines and PT Indosat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, PT Indosat 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 PT Indosat will offset losses from the drop in PT Indosat's long position.| United Airlines vs. Costco Wholesale Corp | United Airlines vs. FAST RETAIL ADR | United Airlines vs. Burlington Stores | United Airlines vs. AEON STORES |
| PT Indosat vs. WESANA HEALTH HOLD | PT Indosat vs. United Airlines Holdings | PT Indosat vs. Garofalo Health Care | PT Indosat vs. RCI Hospitality Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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