Correlation Between United Microelectronics and Enlight Corp
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Enlight Corp 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 Enlight Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Enlight Corp, you can compare the effects of market volatilities on United Microelectronics and Enlight Corp 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 Enlight Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Enlight Corp.
Diversification Opportunities for United Microelectronics and Enlight Corp
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Enlight is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Enlight Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight 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 Enlight Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Corp has no effect on the direction of United Microelectronics i.e., United Microelectronics and Enlight Corp go up and down completely randomly.
Pair Corralation between United Microelectronics and Enlight Corp
Assuming the 90 days trading horizon United Microelectronics is expected to under-perform the Enlight Corp. But the stock apears to be less risky and, when comparing its historical volatility, United Microelectronics is 2.5 times less risky than Enlight Corp. The stock trades about -0.07 of its potential returns per unit of risk. The Enlight Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,005 in Enlight Corp on September 3, 2024 and sell it today you would earn a total of 915.00 from holding Enlight Corp or generate 30.45% 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. Enlight Corp
Performance |
| Timeline |
| United Microelectronics |
| Enlight Corp |
United Microelectronics and Enlight Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Enlight Corp
The main advantage of trading using opposite United Microelectronics and Enlight Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Enlight Corp 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 Enlight Corp will offset losses from the drop in Enlight Corp'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 |
| Enlight Corp vs. Taiwan Semiconductor Manufacturing | Enlight Corp vs. Yang Ming Marine | Enlight Corp vs. ASE Industrial Holding | Enlight Corp vs. AU Optronics |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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