Correlation Between VIA Technologies and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both VIA Technologies and United Microelectronics 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 VIA Technologies and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIA Technologies and United Microelectronics, you can compare the effects of market volatilities on VIA Technologies and United Microelectronics 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 VIA Technologies with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIA Technologies and United Microelectronics.
Diversification Opportunities for VIA Technologies and United Microelectronics
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VIA and United is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding VIA Technologies and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and VIA Technologies 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 VIA Technologies are associated (or correlated) with United Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Microelectronics has no effect on the direction of VIA Technologies i.e., VIA Technologies and United Microelectronics go up and down completely randomly.
Pair Corralation between VIA Technologies and United Microelectronics
Assuming the 90 days trading horizon VIA Technologies is expected to under-perform the United Microelectronics. In addition to that, VIA Technologies is 1.93 times more volatile than United Microelectronics. It trades about -0.21 of its total potential returns per unit of risk. United Microelectronics is currently generating about -0.35 per unit of volatility. If you would invest 4,815 in United Microelectronics on September 1, 2024 and sell it today you would lose (460.00) from holding United Microelectronics or give up 9.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VIA Technologies vs. United Microelectronics
Performance |
| Timeline |
| VIA Technologies |
| United Microelectronics |
VIA Technologies and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIA Technologies and United Microelectronics
The main advantage of trading using opposite VIA Technologies and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIA Technologies position performs unexpectedly, United Microelectronics 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 United Microelectronics will offset losses from the drop in United Microelectronics' long position.The idea behind VIA Technologies and United Microelectronics 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.| United Microelectronics vs. AU Optronics | United Microelectronics vs. Macronix International Co | United Microelectronics vs. Winbond Electronics Corp | United Microelectronics vs. Hon Hai Precision |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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