Correlation Between Weber and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Weber and United Microelectronics 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 Weber and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weber Inc and United Microelectronics, you can compare the effects of market volatilities on Weber and United Microelectronics 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 Weber with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weber and United Microelectronics.
Diversification Opportunities for Weber and United Microelectronics
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weber and United is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Weber Inc and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Weber 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 Weber Inc are associated (or correlated) with United Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Microelectronics has no effect on the direction of Weber i.e., Weber and United Microelectronics go up and down completely randomly.
Pair Corralation between Weber and United Microelectronics
If you would invest 812.00 in Weber Inc on September 22, 2024 and sell it today you would earn a total of 0.00 from holding Weber Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 1.56% |
| Values | Daily Returns |
Weber Inc vs. United Microelectronics
Performance |
| Timeline |
| Weber Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| United Microelectronics |
Weber and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weber and United Microelectronics
The main advantage of trading using opposite Weber and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weber position performs unexpectedly, United Microelectronics 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 United Microelectronics will offset losses from the drop in United Microelectronics' long position.The idea behind Weber Inc and United Microelectronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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