Correlation Between United Microelectronics and M3 Technology
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and M3 Technology 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 M3 Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and M3 Technology, you can compare the effects of market volatilities on United Microelectronics and M3 Technology 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 M3 Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and M3 Technology.
Diversification Opportunities for United Microelectronics and M3 Technology
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and 6799 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and M3 Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M3 Technology 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 M3 Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M3 Technology has no effect on the direction of United Microelectronics i.e., United Microelectronics and M3 Technology go up and down completely randomly.
Pair Corralation between United Microelectronics and M3 Technology
Assuming the 90 days trading horizon United Microelectronics is expected to generate 10.97 times less return on investment than M3 Technology. But when comparing it to its historical volatility, United Microelectronics is 1.99 times less risky than M3 Technology. It trades about 0.0 of its potential returns per unit of risk. M3 Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,452 in M3 Technology on September 3, 2024 and sell it today you would earn a total of 458.00 from holding M3 Technology or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.35% |
| Values | Daily Returns |
United Microelectronics vs. M3 Technology
Performance |
| Timeline |
| United Microelectronics |
| M3 Technology |
United Microelectronics and M3 Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and M3 Technology
The main advantage of trading using opposite United Microelectronics and M3 Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, M3 Technology 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 M3 Technology will offset losses from the drop in M3 Technology'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 |
| M3 Technology vs. Shinkong Synthetic Fiber | M3 Technology vs. Jinan Acetate Chemical | M3 Technology vs. Mercuries Data Systems | M3 Technology vs. Double Bond Chemical |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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