Correlation Between Global Unichip and Macroblock

Can any of the company-specific risk be diversified away by investing in both Global Unichip and Macroblock 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 Macroblock 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 Macroblock, you can compare the effects of market volatilities on Global Unichip and Macroblock 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 Macroblock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Unichip and Macroblock.

Diversification Opportunities for Global Unichip and Macroblock

-0.64

Correlation Coefficient

Global Unichip  Macroblock

Excellent diversification

The 3 months correlation between Global and Macroblock is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Global Unichip Corp and Macroblock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macroblock 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 Macroblock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macroblock has no effect on the direction of Global Unichip i.e., Global Unichip and Macroblock go up and down completely randomly.

Pair Corralation between Global Unichip and Macroblock

Assuming the 90 days trading horizon Global Unichip Corp is expected to generate 1.8 times more return on investment than Macroblock. However, Global Unichip is 1.8 times more volatile than Macroblock. It trades about 0.21 of its potential returns per unit of risk. Macroblock is currently generating about -0.04 per unit of risk. If you would invest  118,000  in Global Unichip Corp on September 28, 2024 and sell it today you would earn a total of  16,500  from holding Global Unichip Corp or generate 13.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Global Unichip Corp  vs.  Macroblock

Global Unichip Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Unichip Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Global Unichip showed solid returns over the last few months and may actually be approaching a breakup point.

Macroblock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macroblock 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Global Unichip and Macroblock

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

The idea behind Global Unichip Corp and Macroblock 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.