Correlation Between United Microelectronics and KEYBANK

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

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

Diversification Opportunities for United Microelectronics and KEYBANK

-0.67

Correlation Coefficient

United Microelectronics  KEYBANK

Excellent diversification

The 3 months correlation between United and KEYBANK is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and KEYBANK NATL ASSN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYBANK NATL ASSN 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 KEYBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEYBANK NATL ASSN has no effect on the direction of United Microelectronics i.e., United Microelectronics and KEYBANK go up and down completely randomly.

Pair Corralation between United Microelectronics and KEYBANK

Considering the 90-day investment horizon United Microelectronics is expected to under-perform the KEYBANK. In addition to that, United Microelectronics is 1.12 times more volatile than KEYBANK NATL ASSN. It trades about -0.22 of its total potential returns per unit of risk. KEYBANK NATL ASSN is currently generating about -0.23 per unit of volatility. If you would invest  9,892  in KEYBANK NATL ASSN on October 3, 2024 and sell it today you would lose (907.00) from holding KEYBANK NATL ASSN or give up 9.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	41.94%
Values	Daily Returns

United Microelectronics  vs.  KEYBANK NATL ASSN

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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

KEYBANK NATL ASSN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYBANK NATL ASSN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for KEYBANK NATL ASSN investors.

Pair Trading with United Microelectronics and KEYBANK

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

The idea behind United Microelectronics and KEYBANK NATL ASSN 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.