Are there any correlations between Airline companies and Solar companies?

[shulink]

Both the airline companies and solar companies (alternative energy) more or less depends on the oil price. If oil goes up, the airline companies will go down, since they have to pay more for fuel and hence profit go down. On the other hand, if oil goes up, it makes solar companies more attractive since companies switch to solar or other alternative energies. So are there any correlations between the airline companies and solar companies? And has anyone try any methods to trade these 2 industries or any other transportation and alternative energy companies? I'm buying solar companies, so I'm trying to learn as much as possible that will effect its price.

 

[rub92me]

Ah, if only it was that simple. Although there is likely to be correlation with extreme moves in oil price and airline companies, I'm not so sure you'd find the same with oil and solar. But even if that was the case, if you have a correlation between A and B and between A and C, it doesn't mean you have a correlation between B and C. And regardless of all that, how will you be able to have a useful strategy if you can't predict what the oil price is going to do?

 

[Boggo]

If oil goes up, the airline companies will go down, since they have to pay more for fuel and hence profit go down.

All airlines charge a levy, ie they pass on the extra cost to passengers, and then like banks and interest rates they seem to take a while (if ever) to lower the levy.

The regional airlines seem to be the only ones that adjust the levy down as soon as they can as a saving to their regional area customers.

Steve Creedy, Aviation writer | September 10, 2008

QANTAS has refused to follow the lead of Singapore Airlines, which yesterday lowered its fuel surcharge on tickets in response to falling jet fuel prices.

Consumer advocates warned that Qantas risked alienating more customers if it failed to reduce its fuel levy.

Singapore announced yesterday it would immediately reduce ticket prices by up to $US10 ($12.40) on short- and medium-haul flights after the recent easing of jet fuel prices.

The move reduces the airline's fuel surcharge on a flight between Australia and Singapore from $US110 a sector to $US100.

The decision came after jet fuel fell from a high of $US181.45 on July 3 to about $US125 a barrel. Oil prices have also fallen, from a high of $US147 in June to $US105.50 last night.

Spokesman for Australian consumer group Choice Christopher Zinn said last night that some surcharges were slapped on quickly and at short notice as fuel prices were rising. "Now it's coming down, we would expect reductions to be passed on where possible," Mr Zinn said.

He said consumers could see that fuel prices had dropped at the pumps and their patience might be stretched if airlines did not pass on the savings.

"It's incumbent on (the airlines) to come to the party or give a pretty good reason why not," he said. "We'd just say in a competitive market consumers should chase the best deal."

Centre for Asia Pacific Aviation executive chairman Peter Harbison also urged Qantas to follow suit. "With Qantas sitting on a fairly good hedging position, there is every reason they should be doing the same, particularly with the likelihood that fuel prices will continue trending down," he said.

But Qantas said yesterday it had no plans to make any immediate cuts and it would continue to monitor the situation. "The price of oil remains high with no signs of stability; it's a volatile market," a Qantas spokesman said.

"So at the current pricing, with our fuel-hedging measures in place, the Qantas fuel bill is going to be $1.5 billion higher this year than the previous financial year."

The nation's second-biggest carrier, Virgin Blue, did not rule out a cut but said it was looking for some stability in the market.

"We're reviewing our position and will come to a decision shortly," a spokeswoman said.

Qantas last announced a change to its fuel surcharge on January 7, when it raised it between $10 and $25 per flight. Crude oil at that stage was $US95 a barrel while yesterday it was more than $105 per barrel.

Qantas has since announced two increases in base fares. These boosted international fares by 3per cent in May and a further 4per cent in June.

Virgin Blue last increased fuel surcharges on February 1, boosting the domestic levy from $19 to $24 and the international surcharge from $35 to $45.

But it also has since increased base fares, boosting international tickets by between $5 and $15 on May 6, and announcing in July that it would increase about half its fully flexible fares by 5 per cent. It has also started charging between $8 and $20 for up to 23kg of checked luggage.

The nation's biggest independent regional carrier, Regional Express, is one of the few other carriers to have reduced fuel surcharges. It announced in late July that it would reduce the levy by $4 a flight from August 1.

 

[Smurf1976]

Solar produces heat or electricity. And in most cases the heat produced is a substitute for electricity or natural gas. And most of the electricity produced is a substitute for electricity generated from natural gas or coal.

Airlines on the other hand are using oil to run their planes. Very little electricity and heat, the things for which solar is used, are produced from oil these days.

So to the extent that there's a linkage, it's somewhat indirect via the ability to switch between coal, oil and natural gas in some industrial plants and power stations. That ability isn't unlimited and in recent times the ability to switch away from oil has been almost fully utilised worldwide.

Building solar means we use less gas, coal and in the long term possibly uranium or other renewable energy sources. It offers only very limited displacement of oil use in a few countries and isolated systems not on major grids.

 

[shulink]

So you mean there is no correlation at all? By trading strategies, I mean to take this in as a factor if there is any correlation, not solely rely on this to make trading decisions. In the past few months, solar got hit pretty hard, while the airline companies seem to go back up. Take Yge & UAUA as an example, UAUA & YGE were both in the 20's few months back. Then as oil rose to $140 and economic condition worsen, UAUA dropped to $5 while YGE stayed in the 20's. And now oil price dropped to $70, the UAUA and YGE seemed to switch positions. YGE is now at $4 while UAUA is in the $13-$15 range. They are both very volatile stocks, rising and dropping from 10%-30% a day, so I was just wondering if we can develop any method to day trade or swing trade these 2 stocks.

 

[Pairs Trader]

Actually UAUA-YGE has poor correlation currently at -15.92% and hasn't gone higher than 70% in almost a year.

 

[shulink]

yah, they have poor correlation about 0.36 in the past 60 days. I should have asked the question "is there any relationships between the 2 stocks or industries" instead of correlation, since correlation is calculated by the coefficient correlation formula.

 

[steve80]

They have a very weak correlation between them. Airliners trend to go down as oil goes up. As oil goes up their is a move to invest in renewable energy sources and that is when solars goes up.

 

[Glen48]

Before any thing happens in the share market or any other market we need to get consumer confidence back up. Until that happens they can drop interest rate to .00001% and things will stay the same.
Australia has the highest debt per person, highest house prices compared to income, house prices at 8-9 times income and EVERY trhing has to and will go down just like next months figures will show and continue down for years.
So sit back and wait..wait.. wait then pounce.