Correlation Between United Microelectronics and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and NYSE Composite 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 NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and NYSE Composite, you can compare the effects of market volatilities on United Microelectronics and NYSE Composite 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 NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and NYSE Composite.
Diversification Opportunities for United Microelectronics and NYSE Composite
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and NYSE is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of United Microelectronics i.e., United Microelectronics and NYSE Composite go up and down completely randomly.
Pair Corralation between United Microelectronics and NYSE Composite
Considering the 90-day investment horizon United Microelectronics is expected to generate 1.21 times less return on investment than NYSE Composite. In addition to that, United Microelectronics is 2.62 times more volatile than NYSE Composite. It trades about 0.02 of its total potential returns per unit of risk. NYSE Composite is currently generating about 0.07 per unit of volatility. If you would invest 1,515,445 in NYSE Composite on September 24, 2024 and sell it today you would earn a total of 396,499 from holding NYSE Composite or generate 26.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
United Microelectronics vs. NYSE Composite
Performance |
| Timeline |
United Microelectronics and NYSE Composite Volatility Contrast
Predicted Return Density |
| Returns |
United Microelectronics
Pair trading matchups for United Microelectronics
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with United Microelectronics and NYSE Composite
The main advantage of trading using opposite United Microelectronics and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.| United Microelectronics vs. Diodes Incorporated | United Microelectronics vs. Daqo New Energy | United Microelectronics vs. Nano Labs | United Microelectronics vs. Impinj Inc |
| NYSE Composite vs. Kulicke and Soffa | NYSE Composite vs. United Microelectronics | NYSE Composite vs. Chester Mining | NYSE Composite vs. NetEase |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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