Correlation Between United Airlines and Oriental Land

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

Diversification Opportunities for United Airlines and Oriental Land

-0.6

Correlation Coefficient

United Airlines  Oriental Land

Excellent diversification

The 3 months correlation between United and Oriental is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Oriental Land Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Land 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 Oriental Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Land has no effect on the direction of United Airlines i.e., United Airlines and Oriental Land go up and down completely randomly.

Pair Corralation between United Airlines and Oriental Land

Considering the 90-day investment horizon United Airlines Holdings is expected to generate 0.51 times more return on investment than Oriental Land. However, United Airlines Holdings is 1.95 times less risky than Oriental Land. It trades about 0.07 of its potential returns per unit of risk. Oriental Land Co is currently generating about -0.13 per unit of risk. If you would invest  9,463  in United Airlines Holdings on September 21, 2024 and sell it today you would earn a total of  268.00  from holding United Airlines Holdings or generate 2.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

United Airlines Holdings  vs.  Oriental Land Co

United Airlines Holdings

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, United Airlines disclosed solid returns over the last few months and may actually be approaching a breakup point.

Oriental Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oriental Land Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 United Airlines and Oriental Land

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

The idea behind United Airlines Holdings and Oriental Land Co 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.