Correlation Between ALi Corp and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both ALi Corp 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 ALi Corp and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALi Corp and United Microelectronics, you can compare the effects of market volatilities on ALi Corp 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 ALi Corp with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALi Corp and United Microelectronics.
Diversification Opportunities for ALi Corp and United Microelectronics
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ALi and United is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding ALi Corp and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and ALi Corp 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 ALi Corp 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 ALi Corp i.e., ALi Corp and United Microelectronics go up and down completely randomly.
Pair Corralation between ALi Corp and United Microelectronics
Assuming the 90 days trading horizon ALi Corp is expected to generate 7.62 times more return on investment than United Microelectronics. However, ALi Corp is 7.62 times more volatile than United Microelectronics. It trades about 0.09 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.31 per unit of risk. If you would invest 1,935 in ALi Corp on September 3, 2024 and sell it today you would earn a total of 810.00 from holding ALi Corp or generate 41.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALi Corp vs. United Microelectronics
Performance |
| Timeline |
| ALi Corp |
| United Microelectronics |
ALi Corp and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALi Corp and United Microelectronics
The main advantage of trading using opposite ALi Corp and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALi Corp 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.| ALi Corp vs. Taiwan Semiconductor Manufacturing | ALi Corp vs. Yang Ming Marine | ALi Corp vs. ASE Industrial Holding | ALi Corp vs. AU Optronics |
| United Microelectronics vs. Taiwan Semiconductor Manufacturing | United Microelectronics vs. Yang Ming Marine | United Microelectronics vs. ASE Industrial Holding | United Microelectronics vs. AU Optronics |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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