Correlation Between Axway Software and UMC Electronics
Can any of the company-specific risk be diversified away by investing in both Axway Software and UMC Electronics 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 Axway Software and UMC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axway Software SA and UMC Electronics Co, you can compare the effects of market volatilities on Axway Software and UMC Electronics 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 Axway Software with a short position of UMC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axway Software and UMC Electronics.
Diversification Opportunities for Axway Software and UMC Electronics
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Axway and UMC is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and UMC Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMC Electronics and Axway Software 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 Axway Software SA are associated (or correlated) with UMC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMC Electronics has no effect on the direction of Axway Software i.e., Axway Software and UMC Electronics go up and down completely randomly.
Pair Corralation between Axway Software and UMC Electronics
Assuming the 90 days trading horizon Axway Software SA is expected to generate 0.7 times more return on investment than UMC Electronics. However, Axway Software SA is 1.44 times less risky than UMC Electronics. It trades about 0.05 of its potential returns per unit of risk. UMC Electronics Co is currently generating about -0.06 per unit of risk. If you would invest 2,040 in Axway Software SA on September 4, 2024 and sell it today you would earn a total of 640.00 from holding Axway Software SA or generate 31.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Axway Software SA vs. UMC Electronics Co
Performance |
| Timeline |
| Axway Software SA |
| UMC Electronics |
Axway Software and UMC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axway Software and UMC Electronics
The main advantage of trading using opposite Axway Software and UMC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axway Software position performs unexpectedly, UMC Electronics 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 UMC Electronics will offset losses from the drop in UMC Electronics' long position.| Axway Software vs. Rocket Internet SE | Axway Software vs. Superior Plus Corp | Axway Software vs. NMI Holdings | Axway Software vs. Origin Agritech |
| UMC Electronics vs. Hon Hai Precision | UMC Electronics vs. Samsung SDI Co | UMC Electronics vs. Murata Manufacturing Co | UMC Electronics vs. Mitsubishi Electric |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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