Correlation Between Global Unichip and Parade Technologies

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

Diversification Opportunities for Global Unichip and Parade Technologies

0.57

Correlation Coefficient

Global Unichip  Parade Technologies

Very weak diversification

The 3 months correlation between Global and Parade is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Global Unichip Corp and Parade Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parade Technologies 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 Parade Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parade Technologies has no effect on the direction of Global Unichip i.e., Global Unichip and Parade Technologies go up and down completely randomly.

Pair Corralation between Global Unichip and Parade Technologies

Assuming the 90 days trading horizon Global Unichip Corp is expected to generate 1.6 times more return on investment than Parade Technologies. However, Global Unichip is 1.6 times more volatile than Parade Technologies. It trades about -0.07 of its potential returns per unit of risk. Parade Technologies is currently generating about -0.15 per unit of risk. If you would invest  132,500  in Global Unichip Corp on December 28, 2024 and sell it today you would lose (17,000) from holding Global Unichip Corp or give up 12.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.21%
Values	Daily Returns

Global Unichip Corp  vs.  Parade Technologies

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.

Parade Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Parade Technologies 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.

Pair Trading with Global Unichip and Parade Technologies

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

The idea behind Global Unichip Corp and Parade Technologies 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.