Correlation Between United Microelectronics and AzureWave Technologies
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and AzureWave 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 AzureWave 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 AzureWave Technologies, you can compare the effects of market volatilities on United Microelectronics and AzureWave 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 AzureWave Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and AzureWave Technologies.
Diversification Opportunities for United Microelectronics and AzureWave Technologies
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and AzureWave is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and AzureWave Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AzureWave 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 AzureWave Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AzureWave Technologies has no effect on the direction of United Microelectronics i.e., United Microelectronics and AzureWave Technologies go up and down completely randomly.
Pair Corralation between United Microelectronics and AzureWave Technologies
Assuming the 90 days trading horizon United Microelectronics is expected to under-perform the AzureWave Technologies. But the stock apears to be less risky and, when comparing its historical volatility, United Microelectronics is 1.39 times less risky than AzureWave Technologies. The stock trades about -0.09 of its potential returns per unit of risk. The AzureWave Technologies is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 5,400 in AzureWave Technologies on September 1, 2024 and sell it today you would lose (990.00) from holding AzureWave Technologies or give up 18.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. AzureWave Technologies
Performance |
| Timeline |
| United Microelectronics |
| AzureWave Technologies |
United Microelectronics and AzureWave Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and AzureWave Technologies
The main advantage of trading using opposite United Microelectronics and AzureWave Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, AzureWave 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 AzureWave Technologies will offset losses from the drop in AzureWave 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 |
| AzureWave Technologies vs. United Microelectronics | AzureWave Technologies vs. Winbond Electronics 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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