Correlation Between AOYAMA TRADING and UMC Electronics
Can any of the company-specific risk be diversified away by investing in both AOYAMA TRADING and UMC Electronics 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 AOYAMA TRADING and UMC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AOYAMA TRADING and UMC Electronics Co, you can compare the effects of market volatilities on AOYAMA TRADING and UMC Electronics 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 AOYAMA TRADING with a short position of UMC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AOYAMA TRADING and UMC Electronics.
Diversification Opportunities for AOYAMA TRADING and UMC Electronics
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AOYAMA and UMC is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING and UMC Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMC Electronics and AOYAMA TRADING 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 AOYAMA TRADING are associated (or correlated) with UMC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMC Electronics has no effect on the direction of AOYAMA TRADING i.e., AOYAMA TRADING and UMC Electronics go up and down completely randomly.
Pair Corralation between AOYAMA TRADING and UMC Electronics
Assuming the 90 days horizon AOYAMA TRADING is expected to generate 3.53 times more return on investment than UMC Electronics. However, AOYAMA TRADING is 3.53 times more volatile than UMC Electronics Co. It trades about 0.39 of its potential returns per unit of risk. UMC Electronics Co is currently generating about -0.15 per unit of risk. If you would invest 785.00 in AOYAMA TRADING on September 2, 2024 and sell it today you would earn a total of 625.00 from holding AOYAMA TRADING or generate 79.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AOYAMA TRADING vs. UMC Electronics Co
Performance |
| Timeline |
| AOYAMA TRADING |
| UMC Electronics |
AOYAMA TRADING and UMC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AOYAMA TRADING and UMC Electronics
The main advantage of trading using opposite AOYAMA TRADING and UMC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AOYAMA TRADING position performs unexpectedly, UMC Electronics 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 UMC Electronics will offset losses from the drop in UMC Electronics' long position.| AOYAMA TRADING vs. Micron Technology | AOYAMA TRADING vs. OAKTRSPECLENDNEW | AOYAMA TRADING vs. Chiba Bank | AOYAMA TRADING vs. Wayside Technology Group |
| UMC Electronics vs. CHINA TONTINE WINES | UMC Electronics vs. Silicon Motion Technology | UMC Electronics vs. China BlueChemical | UMC Electronics vs. Sanyo Chemical Industries |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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