Correlation Between United Microelectronics and AOPEN
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and AOPEN 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 AOPEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and AOPEN Inc, you can compare the effects of market volatilities on United Microelectronics and AOPEN 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 AOPEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and AOPEN.
Diversification Opportunities for United Microelectronics and AOPEN
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and AOPEN is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and AOPEN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOPEN Inc 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 AOPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOPEN Inc has no effect on the direction of United Microelectronics i.e., United Microelectronics and AOPEN go up and down completely randomly.
Pair Corralation between United Microelectronics and AOPEN
Assuming the 90 days trading horizon United Microelectronics is expected to generate 2.42 times less return on investment than AOPEN. But when comparing it to its historical volatility, United Microelectronics is 1.56 times less risky than AOPEN. It trades about 0.01 of its potential returns per unit of risk. AOPEN Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,210 in AOPEN Inc on August 30, 2024 and sell it today you would earn a total of 280.00 from holding AOPEN Inc or generate 5.37% 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. AOPEN Inc
Performance |
| Timeline |
| United Microelectronics |
| AOPEN Inc |
United Microelectronics and AOPEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and AOPEN
The main advantage of trading using opposite United Microelectronics and AOPEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, AOPEN 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 AOPEN will offset losses from the drop in AOPEN'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 |
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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 Valuation module to check real value of public entities based on technical and fundamental data.
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