Correlation Between Union Semiconductor and Advanced Micro

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

By analyzing existing cross correlation between Union Semiconductor Co and Advanced Micro Fabrication, you can compare the effects of market volatilities on Union Semiconductor and Advanced Micro 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 Union Semiconductor with a short position of Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Semiconductor and Advanced Micro.

Diversification Opportunities for Union Semiconductor and Advanced Micro

0.79

Correlation Coefficient

Union Semiconductor  Advanced Micro

Poor diversification

The 3 months correlation between Union and Advanced is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Union Semiconductor Co and Advanced Micro Fabrication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Fabri and Union Semiconductor 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 Union Semiconductor Co are associated (or correlated) with Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Fabri has no effect on the direction of Union Semiconductor i.e., Union Semiconductor and Advanced Micro go up and down completely randomly.

Pair Corralation between Union Semiconductor and Advanced Micro

Assuming the 90 days trading horizon Union Semiconductor Co is expected to under-perform the Advanced Micro. In addition to that, Union Semiconductor is 1.16 times more volatile than Advanced Micro Fabrication. It trades about -0.16 of its total potential returns per unit of risk. Advanced Micro Fabrication is currently generating about -0.12 per unit of volatility. If you would invest  19,600  in Advanced Micro Fabrication on October 26, 2024 and sell it today you would lose (1,052) from holding Advanced Micro Fabrication or give up 5.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Union Semiconductor Co  vs.  Advanced Micro Fabrication

Union Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Advanced Micro Fabri

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Fabrication are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Advanced Micro is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Union Semiconductor and Advanced Micro

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

The idea behind Union Semiconductor Co and Advanced Micro Fabrication 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.