Correlation Between Marketech International and United Microelectronics

Can any of the company-specific risk be diversified away by investing in both Marketech International 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 Marketech International and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marketech International Corp and United Microelectronics, you can compare the effects of market volatilities on Marketech International 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 Marketech International with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marketech International and United Microelectronics.

Diversification Opportunities for Marketech International and United Microelectronics

0.63

Correlation Coefficient

Marketech International  United Microelectronics

Poor diversification

The 3 months correlation between Marketech and United is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Marketech International Corp and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Marketech International 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 Marketech International Corp 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 Marketech International i.e., Marketech International and United Microelectronics go up and down completely randomly.

Pair Corralation between Marketech International and United Microelectronics

Assuming the 90 days trading horizon Marketech International Corp is expected to generate 1.17 times more return on investment than United Microelectronics. However, Marketech International is 1.17 times more volatile than United Microelectronics. It trades about 0.1 of its potential returns per unit of risk. United Microelectronics is currently generating about 0.03 per unit of risk. If you would invest  15,100  in Marketech International Corp on December 25, 2024 and sell it today you would earn a total of  1,450  from holding Marketech International Corp or generate 9.6% return on investment over 90 days.

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

Marketech International Corp  vs.  United Microelectronics

Marketech International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marketech International Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Marketech International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

United Microelectronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Microelectronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, United Microelectronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Marketech International and United Microelectronics

The main advantage of trading using opposite Marketech International and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marketech International 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 Marketech International Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.