Correlation Between Ping An and United Airlines

Can any of the company-specific risk be diversified away by investing in both Ping An and United Airlines 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 Ping An and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ping An Insurance and United Airlines Holdings, you can compare the effects of market volatilities on Ping An and United Airlines 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 Ping An with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and United Airlines.

Diversification Opportunities for Ping An and United Airlines

-0.55

Correlation Coefficient

Ping An  United Airlines

Excellent diversification

The 3 months correlation between Ping and United is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings and Ping An 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 Ping An Insurance are associated (or correlated) with United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Ping An i.e., Ping An and United Airlines go up and down completely randomly.

Pair Corralation between Ping An and United Airlines

Assuming the 90 days trading horizon Ping An is expected to generate 2.32 times less return on investment than United Airlines. In addition to that, Ping An is 1.09 times more volatile than United Airlines Holdings. It trades about 0.09 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.23 per unit of volatility. If you would invest  4,062  in United Airlines Holdings on December 5, 2024 and sell it today you would earn a total of  4,919  from holding United Airlines Holdings or generate 121.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Ping An Insurance  vs.  United Airlines Holdings

Ping An Insurance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ping An is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

United Airlines Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Airlines Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Ping An and United Airlines

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

The idea behind Ping An Insurance and United Airlines Holdings 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.