Correlation Between United Microelectronics and Jentech Precision
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Jentech Precision 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 Jentech Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Jentech Precision Industrial, you can compare the effects of market volatilities on United Microelectronics and Jentech Precision 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 Jentech Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Jentech Precision.
Diversification Opportunities for United Microelectronics and Jentech Precision
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Jentech is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Jentech Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jentech Precision 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 Jentech Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jentech Precision has no effect on the direction of United Microelectronics i.e., United Microelectronics and Jentech Precision go up and down completely randomly.
Pair Corralation between United Microelectronics and Jentech Precision
Assuming the 90 days trading horizon United Microelectronics is expected to generate 34.92 times less return on investment than Jentech Precision. But when comparing it to its historical volatility, United Microelectronics is 1.84 times less risky than Jentech Precision. It trades about 0.01 of its potential returns per unit of risk. Jentech Precision Industrial is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 38,750 in Jentech Precision Industrial on August 31, 2024 and sell it today you would earn a total of 92,250 from holding Jentech Precision Industrial or generate 238.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
United Microelectronics vs. Jentech Precision Industrial
Performance |
| Timeline |
| United Microelectronics |
| Jentech Precision |
United Microelectronics and Jentech Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Jentech Precision
The main advantage of trading using opposite United Microelectronics and Jentech Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Jentech Precision 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 Jentech Precision will offset losses from the drop in Jentech Precision'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 |
| Jentech Precision vs. United Microelectronics | Jentech Precision vs. Winbond Electronics Corp | Jentech Precision vs. Macronix International 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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