Correlation Between United Microelectronics and Ibase Gaming
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Ibase Gaming 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 Ibase Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Ibase Gaming, you can compare the effects of market volatilities on United Microelectronics and Ibase Gaming 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 Ibase Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Ibase Gaming.
Diversification Opportunities for United Microelectronics and Ibase Gaming
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Ibase is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Ibase Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibase Gaming 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 Ibase Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibase Gaming has no effect on the direction of United Microelectronics i.e., United Microelectronics and Ibase Gaming go up and down completely randomly.
Pair Corralation between United Microelectronics and Ibase Gaming
Assuming the 90 days trading horizon United Microelectronics is expected to generate 1.42 times less return on investment than Ibase Gaming. But when comparing it to its historical volatility, United Microelectronics is 1.53 times less risky than Ibase Gaming. It trades about 0.41 of its potential returns per unit of risk. Ibase Gaming is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 3,295 in Ibase Gaming on November 28, 2024 and sell it today you would earn a total of 340.00 from holding Ibase Gaming or generate 10.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
United Microelectronics vs. Ibase Gaming
Performance |
| Timeline |
| United Microelectronics |
| Ibase Gaming |
United Microelectronics and Ibase Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Ibase Gaming
The main advantage of trading using opposite United Microelectronics and Ibase Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Ibase Gaming 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 Ibase Gaming will offset losses from the drop in Ibase Gaming'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 |
| Ibase Gaming vs. Emerging Display Technologies | Ibase Gaming vs. Lanner Electronics | Ibase Gaming vs. King Chou Marine | Ibase Gaming vs. Information Technology Total |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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