Correlation Between Great Wall and Uni President
Can any of the company-specific risk be diversified away by investing in both Great Wall 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 Great Wall and Uni President into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Uni President Enterprises Corp, you can compare the effects of market volatilities on Great Wall 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 Great Wall with a short position of Uni President. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Uni President.
Diversification Opportunities for Great Wall and Uni President
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Great and Uni is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise 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 Great Wall 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 Great Wall Enterprise 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 Great Wall i.e., Great Wall and Uni President go up and down completely randomly.
Pair Corralation between Great Wall and Uni President
Assuming the 90 days trading horizon Great Wall Enterprise is expected to generate 0.5 times more return on investment than Uni President. However, Great Wall Enterprise is 1.99 times less risky than Uni President. It trades about 0.38 of its potential returns per unit of risk. Uni President Enterprises Corp is currently generating about -0.18 per unit of risk. If you would invest 5,110 in Great Wall Enterprise on August 28, 2024 and sell it today you would earn a total of 230.00 from holding Great Wall Enterprise or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Uni President Enterprises Corp
Performance |
| Timeline |
| Great Wall Enterprise |
| Uni President Enterp |
Great Wall and Uni President Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Uni President
The main advantage of trading using opposite Great Wall and Uni President positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall 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.| Great Wall vs. Taiwan Cement Corp | Great Wall vs. Ruentex Development Co | Great Wall vs. Symtek Automation Asia | Great Wall vs. CTCI Corp |
| Uni President vs. Taiwan Cement Corp | Uni President vs. Ruentex Development Co | Uni President vs. Symtek Automation Asia | Uni President vs. CTCI 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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