Correlation Between United Microelectronics and China Overseas

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

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

Diversification Opportunities for United Microelectronics and China Overseas

-0.63

Correlation Coefficient

United Microelectronics  China Overseas

Excellent diversification

The 3 months correlation between United and China is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics Corp and China Overseas Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Overseas Land 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 Corp are associated (or correlated) with China Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Overseas Land has no effect on the direction of United Microelectronics i.e., United Microelectronics and China Overseas go up and down completely randomly.

Pair Corralation between United Microelectronics and China Overseas

Assuming the 90 days trading horizon United Microelectronics Corp is expected to under-perform the China Overseas. But the stock apears to be less risky and, when comparing its historical volatility, United Microelectronics Corp is 1.87 times less risky than China Overseas. The stock trades about -0.03 of its potential returns per unit of risk. The China Overseas Land is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  142.00  in China Overseas Land on April 23, 2025 and sell it today you would earn a total of  7.00  from holding China Overseas Land or generate 4.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

United Microelectronics Corp  vs.  China Overseas Land

United Microelectronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Microelectronics Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, United Microelectronics may actually be approaching a critical reversion point that can send shares even higher in August 2025.

China Overseas Land

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Overseas Land has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, China Overseas is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with United Microelectronics and China Overseas

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

The idea behind United Microelectronics Corp and China Overseas Land 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.