Correlation Between United Microelectronics and Coda Octopus

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

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

Diversification Opportunities for United Microelectronics and Coda Octopus

-0.85

Correlation Coefficient

United Microelectronics  Coda Octopus

Pay attention - limited upside

The 3 months correlation between United and Coda is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Coda Octopus Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coda Octopus Group and United Microelectronics 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 United Microelectronics are associated (or correlated) with Coda Octopus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coda Octopus Group has no effect on the direction of United Microelectronics i.e., United Microelectronics and Coda Octopus go up and down completely randomly.

Pair Corralation between United Microelectronics and Coda Octopus

Considering the 90-day investment horizon United Microelectronics is expected to generate 0.61 times more return on investment than Coda Octopus. However, United Microelectronics is 1.63 times less risky than Coda Octopus. It trades about -0.13 of its potential returns per unit of risk. Coda Octopus Group is currently generating about -0.38 per unit of risk. If you would invest  680.00  in United Microelectronics on September 21, 2024 and sell it today you would lose (28.00) from holding United Microelectronics or give up 4.12% of portfolio value over 90 days.

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

United Microelectronics  vs.  Coda Octopus Group

United Microelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Microelectronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Coda Octopus Group

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coda Octopus Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Coda Octopus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with United Microelectronics and Coda Octopus

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

The idea behind United Microelectronics and Coda Octopus Group 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.