Correlation Between UMC Electronics and AOYAMA TRADING
Can any of the company-specific risk be diversified away by investing in both UMC Electronics and AOYAMA TRADING 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 UMC Electronics and AOYAMA TRADING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UMC Electronics Co and AOYAMA TRADING, you can compare the effects of market volatilities on UMC Electronics and AOYAMA TRADING 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 UMC Electronics with a short position of AOYAMA TRADING. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMC Electronics and AOYAMA TRADING.
Diversification Opportunities for UMC Electronics and AOYAMA TRADING
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between UMC and AOYAMA is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding UMC Electronics Co and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING and UMC Electronics 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 UMC Electronics Co are associated (or correlated) with AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of UMC Electronics i.e., UMC Electronics and AOYAMA TRADING go up and down completely randomly.
Pair Corralation between UMC Electronics and AOYAMA TRADING
Assuming the 90 days horizon UMC Electronics Co is expected to under-perform the AOYAMA TRADING. But the stock apears to be less risky and, when comparing its historical volatility, UMC Electronics Co is 1.75 times less risky than AOYAMA TRADING. The stock trades about -0.03 of its potential returns per unit of risk. The AOYAMA TRADING is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 366.00 in AOYAMA TRADING on November 28, 2024 and sell it today you would earn a total of 964.00 from holding AOYAMA TRADING or generate 263.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UMC Electronics Co vs. AOYAMA TRADING
Performance |
| Timeline |
| UMC Electronics |
| AOYAMA TRADING |
UMC Electronics and AOYAMA TRADING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMC Electronics and AOYAMA TRADING
The main advantage of trading using opposite UMC Electronics and AOYAMA TRADING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMC Electronics position performs unexpectedly, AOYAMA TRADING 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 AOYAMA TRADING will offset losses from the drop in AOYAMA TRADING's long position.| UMC Electronics vs. MARKET VECTR RETAIL | UMC Electronics vs. FLOW TRADERS LTD | UMC Electronics vs. Tradeweb Markets | UMC Electronics vs. Indutrade AB |
| AOYAMA TRADING vs. FAST RETAILCOSPHDR 1 | AOYAMA TRADING vs. FAST RETAIL ADR | AOYAMA TRADING vs. Ross Stores | AOYAMA TRADING vs. Designer Brands |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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