Correlation Between Wei Chuan and Uni President
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and Uni President 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 Wei Chuan and Uni President into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wei Chuan Foods and Uni President Enterprises Corp, you can compare the effects of market volatilities on Wei Chuan and Uni President 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 Wei Chuan with a short position of Uni President. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and Uni President.
Diversification Opportunities for Wei Chuan and Uni President
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wei and Uni is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and Uni President Enterprises Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uni President Enterp and Wei Chuan 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 Wei Chuan Foods are associated (or correlated) with Uni President. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uni President Enterp has no effect on the direction of Wei Chuan i.e., Wei Chuan and Uni President go up and down completely randomly.
Pair Corralation between Wei Chuan and Uni President
Assuming the 90 days trading horizon Wei Chuan Foods is expected to under-perform the Uni President. But the stock apears to be less risky and, when comparing its historical volatility, Wei Chuan Foods is 1.58 times less risky than Uni President. The stock trades about -0.01 of its potential returns per unit of risk. The Uni President Enterprises Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,413 in Uni President Enterprises Corp on September 3, 2024 and sell it today you would earn a total of 2,147 from holding Uni President Enterprises Corp or generate 33.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Wei Chuan Foods vs. Uni President Enterprises Corp
Performance |
| Timeline |
| Wei Chuan Foods |
| Uni President Enterp |
Wei Chuan and Uni President Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and Uni President
The main advantage of trading using opposite Wei Chuan and Uni President positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, Uni President 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 Uni President will offset losses from the drop in Uni President's long position.| Wei Chuan vs. TTET Union Corp | Wei Chuan vs. Uni President Enterprises Corp | Wei Chuan vs. Charoen Pokphand Enterprise |
| Uni President vs. President Chain Store | Uni President vs. Formosa Plastics Corp | Uni President vs. Nan Ya Plastics | Uni President vs. Taiwan Cement Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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