Correlation Between Gladstone Investment and UMC Electronics
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and UMC Electronics 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 Gladstone Investment and UMC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and UMC Electronics Co, you can compare the effects of market volatilities on Gladstone Investment and UMC Electronics 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 Gladstone Investment with a short position of UMC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and UMC Electronics.
Diversification Opportunities for Gladstone Investment and UMC Electronics
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gladstone and UMC is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and UMC Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMC Electronics and Gladstone Investment 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 Gladstone Investment are associated (or correlated) with UMC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMC Electronics has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and UMC Electronics go up and down completely randomly.
Pair Corralation between Gladstone Investment and UMC Electronics
Assuming the 90 days horizon Gladstone Investment is expected to generate 0.61 times more return on investment than UMC Electronics. However, Gladstone Investment is 1.64 times less risky than UMC Electronics. It trades about 0.05 of its potential returns per unit of risk. UMC Electronics Co is currently generating about -0.03 per unit of risk. If you would invest 912.00 in Gladstone Investment on August 30, 2024 and sell it today you would earn a total of 371.00 from holding Gladstone Investment or generate 40.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Gladstone Investment vs. UMC Electronics Co
Performance |
| Timeline |
| Gladstone Investment |
| UMC Electronics |
Gladstone Investment and UMC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and UMC Electronics
The main advantage of trading using opposite Gladstone Investment and UMC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, UMC Electronics 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 UMC Electronics will offset losses from the drop in UMC Electronics' long position.| Gladstone Investment vs. HYDROFARM HLD GRP | Gladstone Investment vs. OURGAME INTHOLDL 00005 | Gladstone Investment vs. PENN NATL GAMING | Gladstone Investment vs. Titan Machinery |
| UMC Electronics vs. Singapore Reinsurance | UMC Electronics vs. MSAD INSURANCE | UMC Electronics vs. LIFENET INSURANCE CO | UMC Electronics vs. QBE Insurance Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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