Correlation Between United Microelectronics and Taiwan Sanyo
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Taiwan Sanyo 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 United Microelectronics and Taiwan Sanyo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Taiwan Sanyo Electric, you can compare the effects of market volatilities on United Microelectronics and Taiwan Sanyo 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 United Microelectronics with a short position of Taiwan Sanyo. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Taiwan Sanyo.
Diversification Opportunities for United Microelectronics and Taiwan Sanyo
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Taiwan is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Taiwan Sanyo Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Sanyo Electric and United Microelectronics 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 United Microelectronics are associated (or correlated) with Taiwan Sanyo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Sanyo Electric has no effect on the direction of United Microelectronics i.e., United Microelectronics and Taiwan Sanyo go up and down completely randomly.
Pair Corralation between United Microelectronics and Taiwan Sanyo
Assuming the 90 days trading horizon United Microelectronics is expected to under-perform the Taiwan Sanyo. In addition to that, United Microelectronics is 1.59 times more volatile than Taiwan Sanyo Electric. It trades about -0.02 of its total potential returns per unit of risk. Taiwan Sanyo Electric is currently generating about 0.02 per unit of volatility. If you would invest 3,620 in Taiwan Sanyo Electric on October 25, 2024 and sell it today you would earn a total of 250.00 from holding Taiwan Sanyo Electric or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. Taiwan Sanyo Electric
Performance |
| Timeline |
| United Microelectronics |
| Taiwan Sanyo Electric |
United Microelectronics and Taiwan Sanyo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Taiwan Sanyo
The main advantage of trading using opposite United Microelectronics and Taiwan Sanyo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Taiwan Sanyo 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 Taiwan Sanyo will offset losses from the drop in Taiwan Sanyo's long position.| United Microelectronics vs. AU Optronics | United Microelectronics vs. Macronix International Co | United Microelectronics vs. Winbond Electronics Corp | United Microelectronics vs. Hon Hai Precision |
| Taiwan Sanyo vs. Sampo Corp | Taiwan Sanyo vs. China Electric Manufacturing | Taiwan Sanyo vs. Walsin Lihwa Corp | Taiwan Sanyo vs. Ta Ya 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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