Correlation Between MACOM Technology and Uni President
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Uni President 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 MACOM Technology and Uni President into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Uni President China Holdings, you can compare the effects of market volatilities on MACOM Technology and Uni President 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 MACOM Technology with a short position of Uni President. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Uni President.
Diversification Opportunities for MACOM Technology and Uni President
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MACOM and Uni is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Uni President China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uni President China and MACOM Technology 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 MACOM Technology Solutions are associated (or correlated) with Uni President. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uni President China has no effect on the direction of MACOM Technology i.e., MACOM Technology and Uni President go up and down completely randomly.
Pair Corralation between MACOM Technology and Uni President
Given the investment horizon of 90 days MACOM Technology is expected to generate 5.19 times less return on investment than Uni President. But when comparing it to its historical volatility, MACOM Technology Solutions is 8.12 times less risky than Uni President. It trades about 0.09 of its potential returns per unit of risk. Uni President China Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 66.00 in Uni President China Holdings on September 4, 2024 and sell it today you would earn a total of 23.00 from holding Uni President China Holdings or generate 34.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.04% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Uni President China Holdings
Performance |
| Timeline |
| MACOM Technology Sol |
| Uni President China |
MACOM Technology and Uni President Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Uni President
The main advantage of trading using opposite MACOM Technology and Uni President positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Uni President 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 Uni President will offset losses from the drop in Uni President's long position.| MACOM Technology vs. NXP Semiconductors NV | MACOM Technology vs. Analog Devices | MACOM Technology vs. Monolithic Power Systems | MACOM Technology vs. ON Semiconductor |
| Uni President vs. MACOM Technology Solutions | Uni President vs. Stagwell | Uni President vs. Advanced Micro Devices | Uni President vs. ON Semiconductor |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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