Correlation Between VIVA WINE and UMC Electronics

Can any of the company-specific risk be diversified away by investing in both VIVA WINE and UMC Electronics 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 VIVA WINE and UMC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VIVA WINE GROUP and UMC Electronics Co, you can compare the effects of market volatilities on VIVA WINE and UMC Electronics 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 VIVA WINE with a short position of UMC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIVA WINE and UMC Electronics.

Diversification Opportunities for VIVA WINE and UMC Electronics

0.61

Correlation Coefficient

VIVA WINE  UMC Electronics

Poor diversification

The 3 months correlation between VIVA and UMC is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP and UMC Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMC Electronics and VIVA WINE 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 VIVA WINE GROUP are associated (or correlated) with UMC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMC Electronics has no effect on the direction of VIVA WINE i.e., VIVA WINE and UMC Electronics go up and down completely randomly.

Pair Corralation between VIVA WINE and UMC Electronics

Assuming the 90 days horizon VIVA WINE GROUP is expected to generate 0.55 times more return on investment than UMC Electronics. However, VIVA WINE GROUP is 1.81 times less risky than UMC Electronics. It trades about 0.16 of its potential returns per unit of risk. UMC Electronics Co is currently generating about 0.05 per unit of risk. If you would invest  321.00  in VIVA WINE GROUP on December 27, 2024 and sell it today you would earn a total of  56.00  from holding VIVA WINE GROUP or generate 17.45% return on investment over 90 days.

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

VIVA WINE GROUP  vs.  UMC Electronics Co

VIVA WINE GROUP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VIVA WINE GROUP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, VIVA WINE reported solid returns over the last few months and may actually be approaching a breakup point.

UMC Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UMC Electronics Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, UMC Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with VIVA WINE and UMC Electronics

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

The idea behind VIVA WINE GROUP and UMC Electronics Co 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.