Correlation Between United Microelectronics and Provision Information
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Provision Information 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 Provision Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Provision Information CoLtd, you can compare the effects of market volatilities on United Microelectronics and Provision Information 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 Provision Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Provision Information.
Diversification Opportunities for United Microelectronics and Provision Information
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Provision is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Provision Information CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provision Information 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 Provision Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provision Information has no effect on the direction of United Microelectronics i.e., United Microelectronics and Provision Information go up and down completely randomly.
Pair Corralation between United Microelectronics and Provision Information
Assuming the 90 days trading horizon United Microelectronics is expected to under-perform the Provision Information. In addition to that, United Microelectronics is 1.05 times more volatile than Provision Information CoLtd. It trades about -0.2 of its total potential returns per unit of risk. Provision Information CoLtd is currently generating about 0.04 per unit of volatility. If you would invest 7,080 in Provision Information CoLtd on November 2, 2024 and sell it today you would earn a total of 320.00 from holding Provision Information CoLtd or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. Provision Information CoLtd
Performance |
| Timeline |
| United Microelectronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Provision Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
United Microelectronics and Provision Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Provision Information
The main advantage of trading using opposite United Microelectronics and Provision Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Provision Information 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 Provision Information will offset losses from the drop in Provision Information's long position.The idea behind United Microelectronics and Provision Information CoLtd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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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