Correlation Between United Microelectronics and Sinopower Semiconductor
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Sinopower Semiconductor 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 Sinopower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Sinopower Semiconductor, you can compare the effects of market volatilities on United Microelectronics and Sinopower Semiconductor 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 Sinopower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Sinopower Semiconductor.
Diversification Opportunities for United Microelectronics and Sinopower Semiconductor
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Sinopower is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Sinopower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopower Semiconductor 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 Sinopower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopower Semiconductor has no effect on the direction of United Microelectronics i.e., United Microelectronics and Sinopower Semiconductor go up and down completely randomly.
Pair Corralation between United Microelectronics and Sinopower Semiconductor
Assuming the 90 days trading horizon United Microelectronics is expected to under-perform the Sinopower Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, United Microelectronics is 1.21 times less risky than Sinopower Semiconductor. The stock trades about -0.09 of its potential returns per unit of risk. The Sinopower Semiconductor is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 11,100 in Sinopower Semiconductor on September 1, 2024 and sell it today you would lose (1,980) from holding Sinopower Semiconductor or give up 17.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. Sinopower Semiconductor
Performance |
| Timeline |
| United Microelectronics |
| Sinopower Semiconductor |
United Microelectronics and Sinopower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Sinopower Semiconductor
The main advantage of trading using opposite United Microelectronics and Sinopower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Sinopower Semiconductor 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 Sinopower Semiconductor will offset losses from the drop in Sinopower Semiconductor'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 |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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