Correlation Between NI Holdings and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both NI Holdings 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 NI Holdings and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and United Microelectronics, you can compare the effects of market volatilities on NI Holdings 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 NI Holdings with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and United Microelectronics.
Diversification Opportunities for NI Holdings and United Microelectronics
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NODK and United is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and NI Holdings 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 NI Holdings 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 NI Holdings i.e., NI Holdings and United Microelectronics go up and down completely randomly.
Pair Corralation between NI Holdings and United Microelectronics
Given the investment horizon of 90 days NI Holdings is expected to under-perform the United Microelectronics. In addition to that, NI Holdings is 1.32 times more volatile than United Microelectronics. It trades about -0.18 of its total potential returns per unit of risk. United Microelectronics is currently generating about -0.12 per unit of volatility. If you would invest 677.00 in United Microelectronics on September 22, 2024 and sell it today you would lose (25.00) from holding United Microelectronics or give up 3.69% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NI Holdings vs. United Microelectronics
Performance |
Timeline |
NI Holdings |
United Microelectronics |
NI Holdings and United Microelectronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NI Holdings and United Microelectronics
The main advantage of trading using opposite NI Holdings and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings 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.NI Holdings vs. Horace Mann Educators | NI Holdings vs. Donegal Group A | NI Holdings vs. Global Indemnity PLC | NI Holdings vs. Selective Insurance Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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