Correlation Between Canaan and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Canaan 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 Canaan and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canaan Inc and United Microelectronics, you can compare the effects of market volatilities on Canaan 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 Canaan with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canaan and United Microelectronics.
Diversification Opportunities for Canaan and United Microelectronics
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Canaan and United is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Canaan Inc and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Canaan 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 Canaan Inc 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 Canaan i.e., Canaan and United Microelectronics go up and down completely randomly.
Pair Corralation between Canaan and United Microelectronics
Considering the 90-day investment horizon Canaan Inc is expected to generate 4.01 times more return on investment than United Microelectronics. However, Canaan is 4.01 times more volatile than United Microelectronics. It trades about 0.05 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.03 per unit of risk. If you would invest 155.00 in Canaan Inc on October 20, 2024 and sell it today you would earn a total of 46.00 from holding Canaan Inc or generate 29.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canaan Inc vs. United Microelectronics
Performance |
| Timeline |
| Canaan Inc |
| United Microelectronics |
Canaan and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canaan and United Microelectronics
The main advantage of trading using opposite Canaan and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canaan 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.| Canaan vs. 3D Systems | Canaan vs. NetApp Inc | Canaan vs. Rigetti Computing | Canaan vs. Logitech International SA |
| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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