Correlation Between United Microelectronics and 694308KC0

Can any of the company-specific risk be diversified away by investing in both United Microelectronics and 694308KC0 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 694308KC0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Microelectronics and PCG 44 01 MAR 32, you can compare the effects of market volatilities on United Microelectronics and 694308KC0 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 694308KC0. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and 694308KC0.

Diversification Opportunities for United Microelectronics and 694308KC0

0.53

Correlation Coefficient

United Microelectronics  694308KC0

Very weak diversification

The 3 months correlation between United and 694308KC0 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and PCG 44 01 MAR 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCG 44 01 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 694308KC0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCG 44 01 has no effect on the direction of United Microelectronics i.e., United Microelectronics and 694308KC0 go up and down completely randomly.

Pair Corralation between United Microelectronics and 694308KC0

Considering the 90-day investment horizon United Microelectronics is expected to under-perform the 694308KC0. But the stock apears to be less risky and, when comparing its historical volatility, United Microelectronics is 1.25 times less risky than 694308KC0. The stock trades about -0.2 of its potential returns per unit of risk. The PCG 44 01 MAR 32 is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  9,513  in PCG 44 01 MAR 32 on September 23, 2024 and sell it today you would lose (1,154) from holding PCG 44 01 MAR 32 or give up 12.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	79.07%
Values	Daily Returns

United Microelectronics  vs.  PCG 44 01 MAR 32

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 unsteady 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.

PCG 44 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCG 44 01 MAR 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for PCG 44 01 MAR 32 investors.

Pair Trading with United Microelectronics and 694308KC0

The main advantage of trading using opposite United Microelectronics and 694308KC0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, 694308KC0 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 694308KC0 will offset losses from the drop in 694308KC0's long position.

The idea behind United Microelectronics and PCG 44 01 MAR 32 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.