Correlation Between United Microelectronics and Prosperity Dielectrics
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Prosperity Dielectrics 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 Prosperity Dielectrics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Prosperity Dielectrics Co, you can compare the effects of market volatilities on United Microelectronics and Prosperity Dielectrics 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 Prosperity Dielectrics. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Prosperity Dielectrics.
Diversification Opportunities for United Microelectronics and Prosperity Dielectrics
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Prosperity is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Prosperity Dielectrics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosperity Dielectrics 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 Prosperity Dielectrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosperity Dielectrics has no effect on the direction of United Microelectronics i.e., United Microelectronics and Prosperity Dielectrics go up and down completely randomly.
Pair Corralation between United Microelectronics and Prosperity Dielectrics
Assuming the 90 days trading horizon United Microelectronics is expected to under-perform the Prosperity Dielectrics. But the stock apears to be less risky and, when comparing its historical volatility, United Microelectronics is 1.11 times less risky than Prosperity Dielectrics. The stock trades about -0.33 of its potential returns per unit of risk. The Prosperity Dielectrics Co is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 4,660 in Prosperity Dielectrics Co on August 30, 2024 and sell it today you would lose (335.00) from holding Prosperity Dielectrics Co or give up 7.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. Prosperity Dielectrics Co
Performance |
| Timeline |
| United Microelectronics |
| Prosperity Dielectrics |
United Microelectronics and Prosperity Dielectrics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Prosperity Dielectrics
The main advantage of trading using opposite United Microelectronics and Prosperity Dielectrics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Prosperity Dielectrics 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 Prosperity Dielectrics will offset losses from the drop in Prosperity Dielectrics' 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 |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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