Correlation Between Chun Yuan and Universal Microelectronics
Can any of the company-specific risk be diversified away by investing in both Chun Yuan and Universal 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 Chun Yuan and Universal Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chun Yuan Steel and Universal Microelectronics Co, you can compare the effects of market volatilities on Chun Yuan and Universal 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 Chun Yuan with a short position of Universal Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chun Yuan and Universal Microelectronics.
Diversification Opportunities for Chun Yuan and Universal Microelectronics
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chun and Universal is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Chun Yuan Steel and Universal Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Microelectronics and Chun Yuan 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 Chun Yuan Steel are associated (or correlated) with Universal Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Microelectronics has no effect on the direction of Chun Yuan i.e., Chun Yuan and Universal Microelectronics go up and down completely randomly.
Pair Corralation between Chun Yuan and Universal Microelectronics
Assuming the 90 days trading horizon Chun Yuan Steel is expected to generate 0.28 times more return on investment than Universal Microelectronics. However, Chun Yuan Steel is 3.51 times less risky than Universal Microelectronics. It trades about -0.05 of its potential returns per unit of risk. Universal Microelectronics Co is currently generating about -0.23 per unit of risk. If you would invest 1,810 in Chun Yuan Steel on October 25, 2024 and sell it today you would lose (15.00) from holding Chun Yuan Steel or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chun Yuan Steel vs. Universal Microelectronics Co
Performance |
| Timeline |
| Chun Yuan Steel |
| Universal Microelectronics |
Chun Yuan and Universal Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chun Yuan and Universal Microelectronics
The main advantage of trading using opposite Chun Yuan and Universal Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chun Yuan position performs unexpectedly, Universal 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 Universal Microelectronics will offset losses from the drop in Universal Microelectronics' long position.| Chun Yuan vs. Hsin Kuang Steel | Chun Yuan vs. Chung Hung Steel | Chun Yuan vs. China Steel Structure | Chun Yuan vs. Feng Hsin Steel |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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