Correlation Between CapitaLand Investment and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment 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 CapitaLand Investment and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CapitaLand Investment Limited and United Microelectronics, you can compare the effects of market volatilities on CapitaLand Investment 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 CapitaLand Investment with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and United Microelectronics.
Diversification Opportunities for CapitaLand Investment and United Microelectronics
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CapitaLand and United is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and CapitaLand Investment 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 CapitaLand Investment Limited 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 CapitaLand Investment i.e., CapitaLand Investment and United Microelectronics go up and down completely randomly.
Pair Corralation between CapitaLand Investment and United Microelectronics
Assuming the 90 days horizon CapitaLand Investment Limited is expected to generate 2.74 times more return on investment than United Microelectronics. However, CapitaLand Investment is 2.74 times more volatile than United Microelectronics. It trades about 0.03 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.02 per unit of risk. If you would invest 194.00 in CapitaLand Investment Limited on September 14, 2024 and sell it today you would earn a total of 5.00 from holding CapitaLand Investment Limited or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
CapitaLand Investment Limited vs. United Microelectronics
Performance |
| Timeline |
| CapitaLand Investment |
| United Microelectronics |
CapitaLand Investment and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapitaLand Investment and United Microelectronics
The main advantage of trading using opposite CapitaLand Investment and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment 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.| CapitaLand Investment vs. Asia Pptys | CapitaLand Investment vs. Adler Group SA | CapitaLand Investment vs. Ambase Corp | CapitaLand Investment vs. Bridgemarq Real Estate |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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