Correlation Between Allient and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Allient 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 Allient and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allient and United Microelectronics, you can compare the effects of market volatilities on Allient 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 Allient with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allient and United Microelectronics.
Diversification Opportunities for Allient and United Microelectronics
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Allient and United is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Allient and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Allient 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 Allient 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 Allient i.e., Allient and United Microelectronics go up and down completely randomly.
Pair Corralation between Allient and United Microelectronics
Given the investment horizon of 90 days Allient is expected to generate 1.48 times more return on investment than United Microelectronics. However, Allient is 1.48 times more volatile than United Microelectronics. It trades about 0.22 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.27 per unit of risk. If you would invest 2,325 in Allient on September 13, 2024 and sell it today you would earn a total of 244.00 from holding Allient or generate 10.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allient vs. United Microelectronics
Performance |
| Timeline |
| Allient |
| United Microelectronics |
Allient and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allient and United Microelectronics
The main advantage of trading using opposite Allient and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allient 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.| Allient vs. Entravision Communications | Allient vs. Marchex | Allient vs. Sable Offshore Corp | Allient vs. CarsalesCom Ltd ADR |
| United Microelectronics vs. Silicon Motion Technology | United Microelectronics vs. ASE Industrial Holding | United Microelectronics vs. ChipMOS Technologies | United Microelectronics vs. SemiLEDS |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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