Correlation Between UNISEM and Automobile
Can any of the company-specific risk be diversified away by investing in both UNISEM and Automobile 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 UNISEM and Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNISEM Co and Automobile Pc, you can compare the effects of market volatilities on UNISEM and Automobile 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 UNISEM with a short position of Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNISEM and Automobile.
Diversification Opportunities for UNISEM and Automobile
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UNISEM and Automobile is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding UNISEM Co and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc and UNISEM 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 UNISEM Co are associated (or correlated) with Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of UNISEM i.e., UNISEM and Automobile go up and down completely randomly.
Pair Corralation between UNISEM and Automobile
Assuming the 90 days trading horizon UNISEM Co is expected to generate 1.21 times more return on investment than Automobile. However, UNISEM is 1.21 times more volatile than Automobile Pc. It trades about -0.02 of its potential returns per unit of risk. Automobile Pc is currently generating about -0.05 per unit of risk. If you would invest 767,000 in UNISEM Co on August 25, 2024 and sell it today you would lose (178,000) from holding UNISEM Co or give up 23.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNISEM Co vs. Automobile Pc
Performance |
| Timeline |
| UNISEM |
| Automobile Pc |
UNISEM and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNISEM and Automobile
The main advantage of trading using opposite UNISEM and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNISEM position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's long position.| UNISEM vs. Kukdong Oil Chemicals | UNISEM vs. Hankuk Steel Wire | UNISEM vs. Fine Besteel Co | UNISEM vs. BGF Retail Co |
| Automobile vs. Busan Industrial Co | Automobile vs. Busan Ind | Automobile vs. Mirae Asset Daewoo | Automobile vs. UNISEM Co |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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