Correlation Between United Microelectronics and EGalaxeMPIA Technology
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and EGalaxeMPIA Technology 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 EGalaxeMPIA Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and eGalaxeMPIA Technology, you can compare the effects of market volatilities on United Microelectronics and EGalaxeMPIA Technology 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 EGalaxeMPIA Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and EGalaxeMPIA Technology.
Diversification Opportunities for United Microelectronics and EGalaxeMPIA Technology
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and EGalaxeMPIA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and eGalaxeMPIA Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eGalaxeMPIA Technology 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 EGalaxeMPIA Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eGalaxeMPIA Technology has no effect on the direction of United Microelectronics i.e., United Microelectronics and EGalaxeMPIA Technology go up and down completely randomly.
Pair Corralation between United Microelectronics and EGalaxeMPIA Technology
Assuming the 90 days trading horizon United Microelectronics is expected to under-perform the EGalaxeMPIA Technology. In addition to that, United Microelectronics is 1.76 times more volatile than eGalaxeMPIA Technology. It trades about -0.12 of its total potential returns per unit of risk. eGalaxeMPIA Technology is currently generating about -0.13 per unit of volatility. If you would invest 5,360 in eGalaxeMPIA Technology on September 15, 2024 and sell it today you would lose (905.00) from holding eGalaxeMPIA Technology or give up 16.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. eGalaxeMPIA Technology
Performance |
| Timeline |
| United Microelectronics |
| eGalaxeMPIA Technology |
United Microelectronics and EGalaxeMPIA Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and EGalaxeMPIA Technology
The main advantage of trading using opposite United Microelectronics and EGalaxeMPIA Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, EGalaxeMPIA Technology 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 EGalaxeMPIA Technology will offset losses from the drop in EGalaxeMPIA Technology's 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 |
| EGalaxeMPIA Technology vs. WIN Semiconductors | EGalaxeMPIA Technology vs. GlobalWafers Co | EGalaxeMPIA Technology vs. Novatek Microelectronics Corp | EGalaxeMPIA Technology vs. Ruentex Development Co |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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