Correlation Between United Microelectronics and Taiwan IC
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Taiwan IC 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 IC 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 IC Packaging, you can compare the effects of market volatilities on United Microelectronics and Taiwan IC 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 IC. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Taiwan IC.
Diversification Opportunities for United Microelectronics and Taiwan IC
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Taiwan is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Taiwan IC Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan IC Packaging 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 IC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan IC Packaging has no effect on the direction of United Microelectronics i.e., United Microelectronics and Taiwan IC go up and down completely randomly.
Pair Corralation between United Microelectronics and Taiwan IC
Assuming the 90 days trading horizon United Microelectronics is expected to generate 20.66 times less return on investment than Taiwan IC. But when comparing it to its historical volatility, United Microelectronics is 1.75 times less risky than Taiwan IC. It trades about 0.0 of its potential returns per unit of risk. Taiwan IC Packaging is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,115 in Taiwan IC Packaging on September 3, 2024 and sell it today you would earn a total of 485.00 from holding Taiwan IC Packaging or generate 43.5% 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 IC Packaging
Performance |
| Timeline |
| United Microelectronics |
| Taiwan IC Packaging |
United Microelectronics and Taiwan IC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Taiwan IC
The main advantage of trading using opposite United Microelectronics and Taiwan IC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Taiwan IC 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 IC will offset losses from the drop in Taiwan IC's long position.| United Microelectronics vs. Taiwan Semiconductor Manufacturing | United Microelectronics vs. Yang Ming Marine | United Microelectronics vs. ASE Industrial Holding | United Microelectronics vs. AU Optronics |
| Taiwan IC vs. Taiwan Cooperative Financial | Taiwan IC vs. PChome Online | Taiwan IC vs. Cleanaway Co | Taiwan IC vs. Central Reinsurance Corp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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