Correlation Between United Microelectronics and Yageo Corp
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Yageo Corp 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 Yageo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Yageo Corp, you can compare the effects of market volatilities on United Microelectronics and Yageo Corp 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 Yageo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Yageo Corp.
Diversification Opportunities for United Microelectronics and Yageo Corp
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Yageo is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Yageo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yageo Corp 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 Yageo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yageo Corp has no effect on the direction of United Microelectronics i.e., United Microelectronics and Yageo Corp go up and down completely randomly.
Pair Corralation between United Microelectronics and Yageo Corp
Assuming the 90 days trading horizon United Microelectronics is expected to generate 3.45 times less return on investment than Yageo Corp. But when comparing it to its historical volatility, United Microelectronics is 1.16 times less risky than Yageo Corp. It trades about 0.01 of its potential returns per unit of risk. Yageo Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 50,200 in Yageo Corp on August 24, 2024 and sell it today you would earn a total of 3,500 from holding Yageo Corp or generate 6.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. Yageo Corp
Performance |
| Timeline |
| United Microelectronics |
| Yageo Corp |
United Microelectronics and Yageo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Yageo Corp
The main advantage of trading using opposite United Microelectronics and Yageo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Yageo Corp 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 Yageo Corp will offset losses from the drop in Yageo Corp's long position.| United Microelectronics vs. Novatek Microelectronics Corp | United Microelectronics vs. MediaTek | United Microelectronics vs. Quanta Computer |
| Yageo Corp vs. Novatek Microelectronics Corp | Yageo Corp vs. MediaTek | Yageo Corp vs. Quanta Computer | Yageo Corp vs. United Microelectronics |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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