Correlation Between United Microelectronics and Niagara Mohawk
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Niagara Mohawk 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 United Microelectronics and Niagara Mohawk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Niagara Mohawk Power, you can compare the effects of market volatilities on United Microelectronics and Niagara Mohawk 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 United Microelectronics with a short position of Niagara Mohawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Niagara Mohawk.
Diversification Opportunities for United Microelectronics and Niagara Mohawk
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Niagara is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Niagara Mohawk Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niagara Mohawk Power and United Microelectronics 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 United Microelectronics are associated (or correlated) with Niagara Mohawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niagara Mohawk Power has no effect on the direction of United Microelectronics i.e., United Microelectronics and Niagara Mohawk go up and down completely randomly.
Pair Corralation between United Microelectronics and Niagara Mohawk
Considering the 90-day investment horizon United Microelectronics is expected to generate 0.99 times more return on investment than Niagara Mohawk. However, United Microelectronics is 1.01 times less risky than Niagara Mohawk. It trades about -0.02 of its potential returns per unit of risk. Niagara Mohawk Power is currently generating about -0.04 per unit of risk. If you would invest 756.00 in United Microelectronics on September 14, 2024 and sell it today you would lose (120.00) from holding United Microelectronics or give up 15.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
United Microelectronics vs. Niagara Mohawk Power
Performance |
| Timeline |
| United Microelectronics |
| Niagara Mohawk Power |
United Microelectronics and Niagara Mohawk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Niagara Mohawk
The main advantage of trading using opposite United Microelectronics and Niagara Mohawk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Niagara Mohawk 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 Niagara Mohawk will offset losses from the drop in Niagara Mohawk's long position.| United Microelectronics vs. Silicon Motion Technology | United Microelectronics vs. ASE Industrial Holding | United Microelectronics vs. ChipMOS Technologies | United Microelectronics vs. SemiLEDS |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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