Correlation Between United Microelectronics and BBB Foods
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and BBB Foods 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 BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and BBB Foods, you can compare the effects of market volatilities on United Microelectronics and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and BBB Foods.
Diversification Opportunities for United Microelectronics and BBB Foods
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and BBB is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of United Microelectronics i.e., United Microelectronics and BBB Foods go up and down completely randomly.
Pair Corralation between United Microelectronics and BBB Foods
Considering the 90-day investment horizon United Microelectronics is expected to generate 0.4 times more return on investment than BBB Foods. However, United Microelectronics is 2.52 times less risky than BBB Foods. It trades about -0.18 of its potential returns per unit of risk. BBB Foods is currently generating about -0.14 per unit of risk. If you would invest 698.00 in United Microelectronics on September 20, 2024 and sell it today you would lose (40.00) from holding United Microelectronics or give up 5.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. BBB Foods
Performance |
| Timeline |
| United Microelectronics |
| BBB Foods |
United Microelectronics and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and BBB Foods
The main advantage of trading using opposite United Microelectronics and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| United Microelectronics vs. Silicon Motion Technology | United Microelectronics vs. ASE Industrial Holding | United Microelectronics vs. ChipMOS Technologies | United Microelectronics vs. SemiLEDS |
| BBB Foods vs. Fomento Economico Mexicano | BBB Foods vs. PepsiCo | BBB Foods vs. United Microelectronics | BBB Foods vs. Eltek |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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