Correlation Between United Microelectronics and Elan Microelectronics
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Elan 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 United Microelectronics and Elan Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Elan Microelectronics Corp, you can compare the effects of market volatilities on United Microelectronics and Elan 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 United Microelectronics with a short position of Elan Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Elan Microelectronics.
Diversification Opportunities for United Microelectronics and Elan Microelectronics
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Elan is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Elan Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elan Microelectronics 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 Elan Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elan Microelectronics has no effect on the direction of United Microelectronics i.e., United Microelectronics and Elan Microelectronics go up and down completely randomly.
Pair Corralation between United Microelectronics and Elan Microelectronics
Assuming the 90 days trading horizon United Microelectronics is expected to generate 0.85 times more return on investment than Elan Microelectronics. However, United Microelectronics is 1.17 times less risky than Elan Microelectronics. It trades about -0.02 of its potential returns per unit of risk. Elan Microelectronics Corp is currently generating about -0.02 per unit of risk. If you would invest 4,885 in United Microelectronics on August 27, 2024 and sell it today you would lose (440.00) from holding United Microelectronics or give up 9.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. Elan Microelectronics Corp
Performance |
| Timeline |
| United Microelectronics |
| Elan Microelectronics |
United Microelectronics and Elan Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Elan Microelectronics
The main advantage of trading using opposite United Microelectronics and Elan Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Elan 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 Elan Microelectronics will offset losses from the drop in Elan Microelectronics' long position.| United Microelectronics vs. Novatek Microelectronics Corp | United Microelectronics vs. Quanta Computer |
| Elan Microelectronics vs. Novatek Microelectronics Corp | Elan Microelectronics vs. Quanta Computer | Elan Microelectronics vs. United Microelectronics |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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