Correlation Between United Microelectronics and TPK Holding
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and TPK Holding 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 TPK Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and TPK Holding Co, you can compare the effects of market volatilities on United Microelectronics and TPK Holding 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 TPK Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and TPK Holding.
Diversification Opportunities for United Microelectronics and TPK Holding
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and TPK is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and TPK Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPK Holding 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 TPK Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPK Holding has no effect on the direction of United Microelectronics i.e., United Microelectronics and TPK Holding go up and down completely randomly.
Pair Corralation between United Microelectronics and TPK Holding
Assuming the 90 days trading horizon United Microelectronics is expected to under-perform the TPK Holding. But the stock apears to be less risky and, when comparing its historical volatility, United Microelectronics is 1.57 times less risky than TPK Holding. The stock trades about -0.35 of its potential returns per unit of risk. The TPK Holding Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 4,230 in TPK Holding Co on September 1, 2024 and sell it today you would lose (85.00) from holding TPK Holding Co or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Microelectronics vs. TPK Holding Co
Performance |
| Timeline |
| United Microelectronics |
| TPK Holding |
United Microelectronics and TPK Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and TPK Holding
The main advantage of trading using opposite United Microelectronics and TPK Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, TPK Holding 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 TPK Holding will offset losses from the drop in TPK Holding'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 |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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