Correlation Between United Microelectronics and Yuan High
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Yuan High 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 Yuan High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Yuan High Tech Development, you can compare the effects of market volatilities on United Microelectronics and Yuan High 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 Yuan High. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Yuan High.
Diversification Opportunities for United Microelectronics and Yuan High
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Yuan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Yuan High Tech Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuan High Tech 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 Yuan High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuan High Tech has no effect on the direction of United Microelectronics i.e., United Microelectronics and Yuan High go up and down completely randomly.
Pair Corralation between United Microelectronics and Yuan High
Assuming the 90 days trading horizon United Microelectronics is expected to generate 12.07 times less return on investment than Yuan High. But when comparing it to its historical volatility, United Microelectronics is 2.09 times less risky than Yuan High. It trades about 0.01 of its potential returns per unit of risk. Yuan High Tech Development is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,032 in Yuan High Tech Development on August 30, 2024 and sell it today you would earn a total of 8,018 from holding Yuan High Tech Development or generate 114.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. Yuan High Tech Development
Performance |
| Timeline |
| United Microelectronics |
| Yuan High Tech |
United Microelectronics and Yuan High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Yuan High
The main advantage of trading using opposite United Microelectronics and Yuan High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Yuan High 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 Yuan High will offset losses from the drop in Yuan High'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 |
| Yuan High vs. Tung Thih Electronic | Yuan High vs. Ablerex Electronics Co | Yuan High vs. Great Computer | Yuan High vs. Mercuries Life Insurance |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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