Correlation Between Global Unichip and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Global Unichip 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 Global Unichip and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Unichip Corp and United Microelectronics, you can compare the effects of market volatilities on Global Unichip 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 Global Unichip with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Unichip and United Microelectronics.
Diversification Opportunities for Global Unichip and United Microelectronics
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and United is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Global Unichip Corp and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Global Unichip 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 Global Unichip 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 Global Unichip i.e., Global Unichip and United Microelectronics go up and down completely randomly.
Pair Corralation between Global Unichip and United Microelectronics
Assuming the 90 days trading horizon Global Unichip Corp is expected to generate 2.56 times more return on investment than United Microelectronics. However, Global Unichip is 2.56 times more volatile than United Microelectronics. It trades about 0.25 of its potential returns per unit of risk. United Microelectronics is currently generating about 0.44 per unit of risk. If you would invest 128,000 in Global Unichip Corp on November 27, 2024 and sell it today you would earn a total of 13,500 from holding Global Unichip Corp or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Unichip Corp vs. United Microelectronics
Performance |
| Timeline |
| Global Unichip Corp |
| United Microelectronics |
Global Unichip and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Unichip and United Microelectronics
The main advantage of trading using opposite Global Unichip and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Unichip 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.| Global Unichip vs. Alchip Technologies | Global Unichip vs. Realtek Semiconductor Corp | Global Unichip vs. Faraday Technology Corp | Global Unichip vs. Novatek Microelectronics Corp |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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