Correlation Between Hiwin Technologies and Universal Microelectronics
Can any of the company-specific risk be diversified away by investing in both Hiwin Technologies 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 Hiwin Technologies and Universal Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hiwin Technologies Corp and Universal Microelectronics Co, you can compare the effects of market volatilities on Hiwin Technologies 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 Hiwin Technologies with a short position of Universal Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hiwin Technologies and Universal Microelectronics.
Diversification Opportunities for Hiwin Technologies and Universal Microelectronics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hiwin and Universal is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hiwin Technologies Corp and Universal Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Microelectronics and Hiwin Technologies 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 Hiwin Technologies Corp 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 Hiwin Technologies i.e., Hiwin Technologies and Universal Microelectronics go up and down completely randomly.
Pair Corralation between Hiwin Technologies and Universal Microelectronics
Assuming the 90 days trading horizon Hiwin Technologies Corp is expected to generate 0.89 times more return on investment than Universal Microelectronics. However, Hiwin Technologies Corp is 1.12 times less risky than Universal Microelectronics. It trades about 0.01 of its potential returns per unit of risk. Universal Microelectronics Co is currently generating about -0.01 per unit of risk. If you would invest 23,600 in Hiwin Technologies Corp on September 4, 2024 and sell it today you would lose (100.00) from holding Hiwin Technologies Corp or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hiwin Technologies Corp vs. Universal Microelectronics Co
Performance |
| Timeline |
| Hiwin Technologies Corp |
| Universal Microelectronics |
Hiwin Technologies and Universal Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hiwin Technologies and Universal Microelectronics
The main advantage of trading using opposite Hiwin Technologies and Universal Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hiwin Technologies 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.| Hiwin Technologies vs. Universal Microelectronics Co | Hiwin Technologies vs. AVerMedia Technologies | Hiwin Technologies vs. Symtek Automation Asia | Hiwin Technologies vs. WiseChip Semiconductor |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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