Correlation Between QBE Insurance and UMC Electronics
Can any of the company-specific risk be diversified away by investing in both QBE Insurance 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 QBE Insurance and UMC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QBE Insurance Group and UMC Electronics Co, you can compare the effects of market volatilities on QBE Insurance 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 QBE Insurance with a short position of UMC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and UMC Electronics.
Diversification Opportunities for QBE Insurance and UMC Electronics
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between QBE and UMC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and UMC Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMC Electronics and QBE Insurance 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 QBE Insurance Group 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 QBE Insurance i.e., QBE Insurance and UMC Electronics go up and down completely randomly.
Pair Corralation between QBE Insurance and UMC Electronics
Assuming the 90 days horizon QBE Insurance is expected to generate 1.09 times less return on investment than UMC Electronics. But when comparing it to its historical volatility, QBE Insurance Group is 2.56 times less risky than UMC Electronics. It trades about 0.17 of its potential returns per unit of risk. UMC Electronics Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 183.00 in UMC Electronics Co on November 28, 2024 and sell it today you would earn a total of 8.00 from holding UMC Electronics Co or generate 4.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. UMC Electronics Co
Performance |
| Timeline |
| QBE Insurance Group |
| UMC Electronics |
QBE Insurance and UMC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and UMC Electronics
The main advantage of trading using opposite QBE Insurance and UMC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance 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.| QBE Insurance vs. RETAIL FOOD GROUP | QBE Insurance vs. Soken Chemical Engineering | QBE Insurance vs. Sekisui Chemical Co | QBE Insurance vs. Silicon Motion Technology |
| UMC Electronics vs. MARKET VECTR RETAIL | UMC Electronics vs. FLOW TRADERS LTD | UMC Electronics vs. Tradeweb Markets | UMC Electronics vs. Indutrade AB |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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