Correlation Between United Microelectronics and Beauty Health

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

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

Diversification Opportunities for United Microelectronics and Beauty Health

-0.6

Correlation Coefficient

United Microelectronics  Beauty Health

Excellent diversification

The 3 months correlation between United and Beauty is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Beauty Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Health 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 Beauty Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Health has no effect on the direction of United Microelectronics i.e., United Microelectronics and Beauty Health go up and down completely randomly.

Pair Corralation between United Microelectronics and Beauty Health

Considering the 90-day investment horizon United Microelectronics is expected to generate 0.44 times more return on investment than Beauty Health. However, United Microelectronics is 2.26 times less risky than Beauty Health. It trades about 0.01 of its potential returns per unit of risk. Beauty Health Co is currently generating about -0.01 per unit of risk. If you would invest  673.00  in United Microelectronics on December 21, 2024 and sell it today you would earn a total of  0.00  from holding United Microelectronics or generate 0.0% return on investment over 90 days.

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

United Microelectronics  vs.  Beauty Health Co

United Microelectronics

Risk-Adjusted Performance

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 rather sound primary indicators, United Microelectronics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Beauty Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beauty Health Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Beauty Health is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with United Microelectronics and Beauty Health

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

The idea behind United Microelectronics and Beauty Health 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.