Correlation Between Uni President and Momo
Can any of the company-specific risk be diversified away by investing in both Uni President and Momo 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 Uni President and Momo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uni President Enterprises Corp and momo Inc, you can compare the effects of market volatilities on Uni President and Momo 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 Uni President with a short position of Momo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uni President and Momo.
Diversification Opportunities for Uni President and Momo
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Uni and Momo is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Uni President Enterprises Corp and momo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on momo Inc and Uni President 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 Uni President Enterprises Corp are associated (or correlated) with Momo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of momo Inc has no effect on the direction of Uni President i.e., Uni President and Momo go up and down completely randomly.
Pair Corralation between Uni President and Momo
Assuming the 90 days trading horizon Uni President Enterprises Corp is expected to under-perform the Momo. But the stock apears to be less risky and, when comparing its historical volatility, Uni President Enterprises Corp is 1.39 times less risky than Momo. The stock trades about -0.21 of its potential returns per unit of risk. The momo Inc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 37,000 in momo Inc on September 3, 2024 and sell it today you would lose (650.00) from holding momo Inc or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uni President Enterprises Corp vs. momo Inc
Performance |
| Timeline |
| Uni President Enterp |
| momo Inc |
Uni President and Momo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uni President and Momo
The main advantage of trading using opposite Uni President and Momo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uni President position performs unexpectedly, Momo 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 Momo will offset losses from the drop in Momo's long position.| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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