Correlation Between United Airlines and Indutrade

Can any of the company-specific risk be diversified away by investing in both United Airlines and Indutrade 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 Indutrade 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 Indutrade AB, you can compare the effects of market volatilities on United Airlines and Indutrade 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 Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Indutrade.

Diversification Opportunities for United Airlines and Indutrade

-0.81

Correlation Coefficient

United Airlines  Indutrade

Pay attention - limited upside

The 3 months correlation between United and Indutrade is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB 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 Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of United Airlines i.e., United Airlines and Indutrade go up and down completely randomly.

Pair Corralation between United Airlines and Indutrade

Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 2.03 times more return on investment than Indutrade. However, United Airlines is 2.03 times more volatile than Indutrade AB. It trades about 0.3 of its potential returns per unit of risk. Indutrade AB is currently generating about -0.07 per unit of risk. If you would invest  6,315  in United Airlines Holdings on October 12, 2024 and sell it today you would earn a total of  3,944  from holding United Airlines Holdings or generate 62.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

United Airlines Holdings  vs.  Indutrade AB

United Airlines Holdings

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, United Airlines unveiled solid returns over the last few months and may actually be approaching a breakup point.

Indutrade AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indutrade AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Indutrade is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with United Airlines and Indutrade

The main advantage of trading using opposite United Airlines and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.

The idea behind United Airlines Holdings and Indutrade AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.