Correlation Between United Microelectronics and VIA Technologies
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and VIA Technologies 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 VIA Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and VIA Technologies, you can compare the effects of market volatilities on United Microelectronics and VIA Technologies 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 VIA Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and VIA Technologies.
Diversification Opportunities for United Microelectronics and VIA Technologies
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and VIA is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and VIA Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIA Technologies 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 VIA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIA Technologies has no effect on the direction of United Microelectronics i.e., United Microelectronics and VIA Technologies go up and down completely randomly.
Pair Corralation between United Microelectronics and VIA Technologies
Assuming the 90 days trading horizon United Microelectronics is expected to generate 0.52 times more return on investment than VIA Technologies. However, United Microelectronics is 1.93 times less risky than VIA Technologies. It trades about -0.35 of its potential returns per unit of risk. VIA Technologies is currently generating about -0.21 per unit of risk. If you would invest 4,815 in United Microelectronics on September 1, 2024 and sell it today you would lose (460.00) from holding United Microelectronics or give up 9.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. VIA Technologies
Performance |
| Timeline |
| United Microelectronics |
| VIA Technologies |
United Microelectronics and VIA Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and VIA Technologies
The main advantage of trading using opposite United Microelectronics and VIA Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, VIA Technologies 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 VIA Technologies will offset losses from the drop in VIA Technologies' 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 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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