Correlation Between United Microelectronics and AV Tech
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and AV Tech 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 AV Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and AV Tech Corp, you can compare the effects of market volatilities on United Microelectronics and AV Tech 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 AV Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and AV Tech.
Diversification Opportunities for United Microelectronics and AV Tech
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and 8072 is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and AV Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AV Tech Corp 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 AV Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AV Tech Corp has no effect on the direction of United Microelectronics i.e., United Microelectronics and AV Tech go up and down completely randomly.
Pair Corralation between United Microelectronics and AV Tech
Assuming the 90 days trading horizon United Microelectronics is expected to under-perform the AV Tech. In addition to that, United Microelectronics is 1.16 times more volatile than AV Tech Corp. It trades about -0.3 of its total potential returns per unit of risk. AV Tech Corp is currently generating about -0.2 per unit of volatility. If you would invest 2,790 in AV Tech Corp on August 30, 2024 and sell it today you would lose (140.00) from holding AV Tech Corp or give up 5.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Microelectronics vs. AV Tech Corp
Performance |
| Timeline |
| United Microelectronics |
| AV Tech Corp |
United Microelectronics and AV Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and AV Tech
The main advantage of trading using opposite United Microelectronics and AV Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, AV Tech 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 AV Tech will offset losses from the drop in AV Tech'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 |
| AV Tech vs. AVerMedia Technologies | AV Tech vs. Zinwell | AV Tech vs. In Win Development | AV Tech vs. Chenming Mold Industrial |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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