Correlation Between HEXINDO ADIPERKASA and United Airlines

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

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

Diversification Opportunities for HEXINDO ADIPERKASA and United Airlines

-0.92

Correlation Coefficient

HEXINDO ADIPERKASA  United Airlines

Pay attention - limited upside

The 3 months correlation between HEXINDO and United is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA i.e., HEXINDO ADIPERKASA and United Airlines go up and down completely randomly.

Pair Corralation between HEXINDO ADIPERKASA and United Airlines

Assuming the 90 days trading horizon HEXINDO ADIPERKASA is expected to under-perform the United Airlines. In addition to that, HEXINDO ADIPERKASA is 1.29 times more volatile than United Airlines Holdings. It trades about -0.12 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.46 per unit of volatility. If you would invest  3,998  in United Airlines Holdings on September 3, 2024 and sell it today you would earn a total of  5,144  from holding United Airlines Holdings or generate 128.66% return on investment over 90 days.

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

HEXINDO ADIPERKASA  vs.  United Airlines Holdings

HEXINDO ADIPERKASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEXINDO ADIPERKASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

United Airlines Holdings

Risk-Adjusted Performance

36 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, United Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HEXINDO ADIPERKASA and United Airlines

The main advantage of trading using opposite HEXINDO ADIPERKASA and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.