Correlation Between UNISEM and Hwashin Precision
Can any of the company-specific risk be diversified away by investing in both UNISEM and Hwashin Precision 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 UNISEM and Hwashin Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNISEM Co and Hwashin Precision Engineering, you can compare the effects of market volatilities on UNISEM and Hwashin Precision 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 UNISEM with a short position of Hwashin Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNISEM and Hwashin Precision.
Diversification Opportunities for UNISEM and Hwashin Precision
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between UNISEM and Hwashin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding UNISEM Co and Hwashin Precision Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwashin Precision and UNISEM 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 UNISEM Co are associated (or correlated) with Hwashin Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwashin Precision has no effect on the direction of UNISEM i.e., UNISEM and Hwashin Precision go up and down completely randomly.
Pair Corralation between UNISEM and Hwashin Precision
Assuming the 90 days trading horizon UNISEM is expected to generate 1.51 times less return on investment than Hwashin Precision. But when comparing it to its historical volatility, UNISEM Co is 1.49 times less risky than Hwashin Precision. It trades about 0.5 of its potential returns per unit of risk. Hwashin Precision Engineering is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 104,629 in Hwashin Precision Engineering on October 9, 2024 and sell it today you would earn a total of 40,371 from holding Hwashin Precision Engineering or generate 38.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
UNISEM Co vs. Hwashin Precision Engineering
Performance |
| Timeline |
| UNISEM |
| Hwashin Precision |
UNISEM and Hwashin Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNISEM and Hwashin Precision
The main advantage of trading using opposite UNISEM and Hwashin Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNISEM position performs unexpectedly, Hwashin Precision 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 Hwashin Precision will offset losses from the drop in Hwashin Precision's long position.| UNISEM vs. PI Advanced Materials | UNISEM vs. Wireless Power Amplifier | UNISEM vs. Mobileleader CoLtd | UNISEM vs. LAKE MATERIALS LTD |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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