Correlation Between KEYBANK and United Microelectronics

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

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

Diversification Opportunities for KEYBANK and United Microelectronics

-0.44

Correlation Coefficient

KEYBANK  United Microelectronics

Very good diversification

The 3 months correlation between KEYBANK and United is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding KEYBANK NATL ASSN and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and KEYBANK 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 KEYBANK NATL ASSN are associated (or correlated) with United Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Microelectronics has no effect on the direction of KEYBANK i.e., KEYBANK and United Microelectronics go up and down completely randomly.

Pair Corralation between KEYBANK and United Microelectronics

Assuming the 90 days trading horizon KEYBANK NATL ASSN is expected to generate 0.53 times more return on investment than United Microelectronics. However, KEYBANK NATL ASSN is 1.88 times less risky than United Microelectronics. It trades about -0.22 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.18 per unit of risk. If you would invest  9,758  in KEYBANK NATL ASSN on September 20, 2024 and sell it today you would lose (289.00) from holding KEYBANK NATL ASSN or give up 2.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.95%
Values	Daily Returns

KEYBANK NATL ASSN  vs.  United Microelectronics

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 somewhat strong basic indicators, KEYBANK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with KEYBANK and United Microelectronics

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

The idea behind KEYBANK NATL ASSN and United Microelectronics 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..