Correlation Between Global Unichip and Merida Industry
Can any of the company-specific risk be diversified away by investing in both Global Unichip and Merida Industry 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 Merida Industry 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 Merida Industry Co, you can compare the effects of market volatilities on Global Unichip and Merida Industry 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 Merida Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Unichip and Merida Industry.
Diversification Opportunities for Global Unichip and Merida Industry
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Merida is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Global Unichip Corp and Merida Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merida Industry 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 Merida Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merida Industry has no effect on the direction of Global Unichip i.e., Global Unichip and Merida Industry go up and down completely randomly.
Pair Corralation between Global Unichip and Merida Industry
Assuming the 90 days trading horizon Global Unichip Corp is expected to generate 1.65 times more return on investment than Merida Industry. However, Global Unichip is 1.65 times more volatile than Merida Industry Co. It trades about 0.06 of its potential returns per unit of risk. Merida Industry Co is currently generating about -0.11 per unit of risk. If you would invest 127,500 in Global Unichip Corp on September 26, 2024 and sell it today you would earn a total of 4,500 from holding Global Unichip Corp or generate 3.53% 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. Merida Industry Co
Performance |
Timeline |
Global Unichip Corp |
Merida Industry |
Global Unichip and Merida Industry Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Unichip and Merida Industry
The main advantage of trading using opposite Global Unichip and Merida Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Unichip position performs unexpectedly, Merida Industry 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 Merida Industry will offset losses from the drop in Merida Industry's long position.Global Unichip vs. Century Wind Power | Global Unichip vs. Green World Fintech | Global Unichip vs. Ingentec | Global Unichip vs. Chaheng Precision Co |
Merida Industry vs. Cheng Shin Rubber | Merida Industry vs. Uni President Enterprises Corp | Merida Industry vs. Pou Chen Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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