Correlation Between Global Unichip and New Advanced

Can any of the company-specific risk be diversified away by investing in both Global Unichip and New Advanced 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 Global Unichip and New Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Unichip Corp and New Advanced Electronics, you can compare the effects of market volatilities on Global Unichip and New Advanced 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 Global Unichip with a short position of New Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Unichip and New Advanced.

Diversification Opportunities for Global Unichip and New Advanced

0.07

Correlation Coefficient

Global Unichip  New Advanced

Significant diversification

The 3 months correlation between Global and New is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Global Unichip Corp and New Advanced Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Advanced Electronics and Global Unichip 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 Global Unichip Corp are associated (or correlated) with New Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Advanced Electronics has no effect on the direction of Global Unichip i.e., Global Unichip and New Advanced go up and down completely randomly.

Pair Corralation between Global Unichip and New Advanced

Assuming the 90 days trading horizon Global Unichip Corp is expected to under-perform the New Advanced. In addition to that, Global Unichip is 1.31 times more volatile than New Advanced Electronics. It trades about -0.07 of its total potential returns per unit of risk. New Advanced Electronics is currently generating about 0.07 per unit of volatility. If you would invest  5,330  in New Advanced Electronics on December 29, 2024 and sell it today you would earn a total of  430.00  from holding New Advanced Electronics or generate 8.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Global Unichip Corp  vs.  New Advanced Electronics

Global Unichip Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Unichip Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

New Advanced Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New Advanced Electronics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, New Advanced may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Global Unichip and New Advanced

The main advantage of trading using opposite Global Unichip and New Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Unichip position performs unexpectedly, New Advanced 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 New Advanced will offset losses from the drop in New Advanced's long position.

The idea behind Global Unichip Corp and New Advanced Electronics 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.