Correlation Between Mesa Air and 51Talk Online

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Can any of the company-specific risk be diversified away by investing in both Mesa Air and 51Talk Online 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 Mesa Air and 51Talk Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesa Air Group and 51Talk Online Education, you can compare the effects of market volatilities on Mesa Air and 51Talk Online 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 Mesa Air with a short position of 51Talk Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and 51Talk Online.

Diversification Opportunities for Mesa Air and 51Talk Online

Mesa51TalkDiversified AwayMesa51TalkDiversified Away100%
0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Mesa and 51Talk is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and 51Talk Online Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 51Talk Online Education and Mesa Air 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 Mesa Air Group are associated (or correlated) with 51Talk Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 51Talk Online Education has no effect on the direction of Mesa Air i.e., Mesa Air and 51Talk Online go up and down completely randomly.

Pair Corralation between Mesa Air and 51Talk Online

Given the investment horizon of 90 days Mesa Air Group is expected to generate 0.97 times more return on investment than 51Talk Online. However, Mesa Air Group is 1.03 times less risky than 51Talk Online. It trades about 0.04 of its potential returns per unit of risk. 51Talk Online Education is currently generating about 0.03 per unit of risk. If you would invest  118.00  in Mesa Air Group on September 27, 2024 and sell it today you would earn a total of  6.00  from holding Mesa Air Group or generate 5.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Mesa Air Group  vs.  51Talk Online Education

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-10010
JavaScript chart by amCharts 3.21.15MESA COE
       Timeline  
Mesa Air Group 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Air Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesa Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15NovDecDec0.911.11.21.3
51Talk Online Education 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in 51Talk Online Education are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, 51Talk Online may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15NovDecDec131415161718

Mesa Air and 51Talk Online Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-14.0-10.49-6.97-3.460.05913.497.0310.5814.13 0.0140.0150.0160.0170.0180.0190.020
JavaScript chart by amCharts 3.21.15MESA COE
       Returns  

Pair Trading with Mesa Air and 51Talk Online

The main advantage of trading using opposite Mesa Air and 51Talk Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, 51Talk Online 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 51Talk Online will offset losses from the drop in 51Talk Online's long position.
The idea behind Mesa Air Group and 51Talk Online Education 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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