Correlation Between United Microelectronics and Lucid

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

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

Diversification Opportunities for United Microelectronics and Lucid

0.83

Correlation Coefficient

United Microelectronics  Lucid

Very poor diversification

The 3 months correlation between United and Lucid is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid 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 Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of United Microelectronics i.e., United Microelectronics and Lucid go up and down completely randomly.

Pair Corralation between United Microelectronics and Lucid

Considering the 90-day investment horizon United Microelectronics is expected to under-perform the Lucid. But the stock apears to be less risky and, when comparing its historical volatility, United Microelectronics is 2.86 times less risky than Lucid. The stock trades about -0.24 of its potential returns per unit of risk. The Lucid Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  346.00  in Lucid Group on September 22, 2024 and sell it today you would lose (44.00) from holding Lucid Group or give up 12.72% of portfolio value over 90 days.

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

United Microelectronics  vs.  Lucid 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.

Lucid Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lucid Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Lucid is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with United Microelectronics and Lucid

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

The idea behind United Microelectronics and Lucid 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.