Correlation Between United Microelectronics and Kaimei Electronic
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Kaimei Electronic 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 Kaimei Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Kaimei Electronic Corp, you can compare the effects of market volatilities on United Microelectronics and Kaimei Electronic 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 Kaimei Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Kaimei Electronic.
Diversification Opportunities for United Microelectronics and Kaimei Electronic
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Kaimei is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Kaimei Electronic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaimei Electronic 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 Kaimei Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaimei Electronic Corp has no effect on the direction of United Microelectronics i.e., United Microelectronics and Kaimei Electronic go up and down completely randomly.
Pair Corralation between United Microelectronics and Kaimei Electronic
Assuming the 90 days trading horizon United Microelectronics is expected to under-perform the Kaimei Electronic. But the stock apears to be less risky and, when comparing its historical volatility, United Microelectronics is 1.2 times less risky than Kaimei Electronic. The stock trades about -0.08 of its potential returns per unit of risk. The Kaimei Electronic Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 7,100 in Kaimei Electronic Corp on September 3, 2024 and sell it today you would earn a total of 280.00 from holding Kaimei Electronic Corp or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. Kaimei Electronic Corp
Performance |
| Timeline |
| United Microelectronics |
| Kaimei Electronic Corp |
United Microelectronics and Kaimei Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Kaimei Electronic
The main advantage of trading using opposite United Microelectronics and Kaimei Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Kaimei Electronic 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 Kaimei Electronic will offset losses from the drop in Kaimei Electronic's long position.| United Microelectronics vs. Taiwan Semiconductor Manufacturing | United Microelectronics vs. Yang Ming Marine | United Microelectronics vs. ASE Industrial Holding | United Microelectronics vs. AU Optronics |
| Kaimei Electronic vs. Yageo Corp | Kaimei Electronic vs. Taiwan Mask Corp | Kaimei Electronic vs. Macronix International Co | Kaimei Electronic vs. Gold Circuit Electronics |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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