Correlation Between United Microelectronics and E Lead
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and E Lead 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 E Lead into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and E Lead Electronic Co, you can compare the effects of market volatilities on United Microelectronics and E Lead 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 E Lead. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and E Lead.
Diversification Opportunities for United Microelectronics and E Lead
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and 2497 is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and E Lead Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Lead Electronic 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 E Lead. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Lead Electronic has no effect on the direction of United Microelectronics i.e., United Microelectronics and E Lead go up and down completely randomly.
Pair Corralation between United Microelectronics and E Lead
Assuming the 90 days trading horizon United Microelectronics is expected to under-perform the E Lead. In addition to that, United Microelectronics is 1.73 times more volatile than E Lead Electronic Co. It trades about -0.21 of its total potential returns per unit of risk. E Lead Electronic Co is currently generating about -0.04 per unit of volatility. If you would invest 5,890 in E Lead Electronic Co on November 5, 2024 and sell it today you would lose (60.00) from holding E Lead Electronic Co or give up 1.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. E Lead Electronic Co
Performance |
| Timeline |
| United Microelectronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| E Lead Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
United Microelectronics and E Lead Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and E Lead
The main advantage of trading using opposite United Microelectronics and E Lead positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, E Lead 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 E Lead will offset losses from the drop in E Lead's long position.The idea behind United Microelectronics and E Lead Electronic Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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