Correlation Between Uni President and Chang Type
Can any of the company-specific risk be diversified away by investing in both Uni President and Chang Type 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 Uni President and Chang Type into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uni President Enterprises Corp and Chang Type Industrial, you can compare the effects of market volatilities on Uni President and Chang Type 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 Uni President with a short position of Chang Type. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uni President and Chang Type.
Diversification Opportunities for Uni President and Chang Type
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Uni and Chang is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Uni President Enterprises Corp and Chang Type Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chang Type Industrial and Uni President 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 Uni President Enterprises Corp are associated (or correlated) with Chang Type. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chang Type Industrial has no effect on the direction of Uni President i.e., Uni President and Chang Type go up and down completely randomly.
Pair Corralation between Uni President and Chang Type
Assuming the 90 days trading horizon Uni President Enterprises Corp is expected to generate 0.91 times more return on investment than Chang Type. However, Uni President Enterprises Corp is 1.1 times less risky than Chang Type. It trades about -0.1 of its potential returns per unit of risk. Chang Type Industrial is currently generating about -0.33 per unit of risk. If you would invest 8,790 in Uni President Enterprises Corp on September 23, 2024 and sell it today you would lose (690.00) from holding Uni President Enterprises Corp or give up 7.85% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Uni President Enterprises Corp vs. Chang Type Industrial
Performance |
Timeline |
Uni President Enterp |
Chang Type Industrial |
Uni President and Chang Type Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Uni President and Chang Type
The main advantage of trading using opposite Uni President and Chang Type positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uni President position performs unexpectedly, Chang Type 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 Chang Type will offset losses from the drop in Chang Type's long position.Uni President vs. President Chain Store | Uni President vs. Formosa Plastics Corp | Uni President vs. Nan Ya Plastics | Uni President vs. Taiwan Cement Corp |
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Check out your portfolio center.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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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