Correlation Between Alfa Financial and UMC Electronics
Can any of the company-specific risk be diversified away by investing in both Alfa Financial 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 Alfa Financial and UMC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Financial Software and UMC Electronics Co, you can compare the effects of market volatilities on Alfa Financial 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 Alfa Financial with a short position of UMC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and UMC Electronics.
Diversification Opportunities for Alfa Financial and UMC Electronics
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alfa and UMC is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and UMC Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMC Electronics and Alfa Financial 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 Alfa Financial Software 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 Alfa Financial i.e., Alfa Financial and UMC Electronics go up and down completely randomly.
Pair Corralation between Alfa Financial and UMC Electronics
Assuming the 90 days trading horizon Alfa Financial Software is expected to under-perform the UMC Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Alfa Financial Software is 1.32 times less risky than UMC Electronics. The stock trades about -0.17 of its potential returns per unit of risk. The UMC Electronics Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 173.00 in UMC Electronics Co on October 11, 2024 and sell it today you would earn a total of 10.00 from holding UMC Electronics Co or generate 5.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. UMC Electronics Co
Performance |
| Timeline |
| Alfa Financial Software |
| UMC Electronics |
Alfa Financial and UMC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and UMC Electronics
The main advantage of trading using opposite Alfa Financial and UMC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial 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.| Alfa Financial vs. Summit Hotel Properties | Alfa Financial vs. Beta Systems Software | Alfa Financial vs. MHP Hotel AG | Alfa Financial vs. COVIVIO HOTELS INH |
| UMC Electronics vs. Ribbon Communications | UMC Electronics vs. Alfa Financial Software | UMC Electronics vs. MOBILE FACTORY INC | UMC Electronics vs. Highlight Communications AG |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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