Correlation Between United Microelectronics and CMC Magnetics
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and CMC Magnetics 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 United Microelectronics and CMC Magnetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and CMC Magnetics Corp, you can compare the effects of market volatilities on United Microelectronics and CMC Magnetics 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 United Microelectronics with a short position of CMC Magnetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and CMC Magnetics.
Diversification Opportunities for United Microelectronics and CMC Magnetics
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and CMC is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and CMC Magnetics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMC Magnetics Corp and United Microelectronics 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 United Microelectronics are associated (or correlated) with CMC Magnetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMC Magnetics Corp has no effect on the direction of United Microelectronics i.e., United Microelectronics and CMC Magnetics go up and down completely randomly.
Pair Corralation between United Microelectronics and CMC Magnetics
Assuming the 90 days trading horizon United Microelectronics is expected to under-perform the CMC Magnetics. In addition to that, United Microelectronics is as risky as CMC Magnetics. It trades about -0.34 of its total potential returns per unit of risk. CMC Magnetics Corp is currently generating about -0.14 per unit of volatility. If you would invest 1,170 in CMC Magnetics Corp on August 31, 2024 and sell it today you would lose (50.00) from holding CMC Magnetics Corp or give up 4.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. CMC Magnetics Corp
Performance |
| Timeline |
| United Microelectronics |
| CMC Magnetics Corp |
United Microelectronics and CMC Magnetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and CMC Magnetics
The main advantage of trading using opposite United Microelectronics and CMC Magnetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, CMC Magnetics 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 CMC Magnetics will offset losses from the drop in CMC Magnetics' long position.| United Microelectronics vs. AU Optronics | United Microelectronics vs. Macronix International Co | United Microelectronics vs. Winbond Electronics Corp | United Microelectronics vs. Hon Hai Precision |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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