Correlation Between WM Technology and United Microelectronics

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

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

Diversification Opportunities for WM Technology and United Microelectronics

-0.46

Correlation Coefficient

WM Technology  United Microelectronics

Very good diversification

The 3 months correlation between MAPSW and United is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding WM Technology and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and WM Technology 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 WM Technology 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 WM Technology i.e., WM Technology and United Microelectronics go up and down completely randomly.

Pair Corralation between WM Technology and United Microelectronics

Assuming the 90 days horizon WM Technology is expected to generate 10.67 times more return on investment than United Microelectronics. However, WM Technology is 10.67 times more volatile than United Microelectronics. It trades about 0.07 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.01 per unit of risk. If you would invest  2.25  in WM Technology on May 6, 2025 and sell it today you would lose (0.45) from holding WM Technology or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

WM Technology  vs.  United Microelectronics

WM Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WM Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, WM Technology showed solid returns over the last few months and may actually be approaching a breakup point.

United Microelectronics

Risk-Adjusted Performance

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 rather sound primary indicators, United Microelectronics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WM Technology and United Microelectronics

The main advantage of trading using opposite WM Technology and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WM Technology 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 WM Technology 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.