Correlation Between United Microelectronics and LOCKHEED

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

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

Diversification Opportunities for United Microelectronics and LOCKHEED

0.75

Correlation Coefficient

United Microelectronics  LOCKHEED

Poor diversification

The 3 months correlation between United and LOCKHEED is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and LOCKHEED MARTIN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOCKHEED MARTIN P 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 LOCKHEED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOCKHEED MARTIN P has no effect on the direction of United Microelectronics i.e., United Microelectronics and LOCKHEED go up and down completely randomly.

Pair Corralation between United Microelectronics and LOCKHEED

Considering the 90-day investment horizon United Microelectronics is expected to under-perform the LOCKHEED. But the stock apears to be less risky and, when comparing its historical volatility, United Microelectronics is 1.01 times less risky than LOCKHEED. The stock trades about -0.25 of its potential returns per unit of risk. The LOCKHEED MARTIN P is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  9,368  in LOCKHEED MARTIN P on September 18, 2024 and sell it today you would lose (335.00) from holding LOCKHEED MARTIN P or give up 3.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

United Microelectronics  vs.  LOCKHEED MARTIN P

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.

LOCKHEED MARTIN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOCKHEED MARTIN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LOCKHEED is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Microelectronics and LOCKHEED

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

The idea behind United Microelectronics and LOCKHEED MARTIN P 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.