Correlation Between Everlight Electronics and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Everlight Electronics and United Microelectronics 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 Everlight Electronics and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everlight Electronics Co and United Microelectronics, you can compare the effects of market volatilities on Everlight Electronics and United Microelectronics 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 Everlight Electronics with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everlight Electronics and United Microelectronics.
Diversification Opportunities for Everlight Electronics and United Microelectronics
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Everlight and United is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Everlight Electronics Co and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Everlight Electronics 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 Everlight Electronics Co are associated (or correlated) with United Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Microelectronics has no effect on the direction of Everlight Electronics i.e., Everlight Electronics and United Microelectronics go up and down completely randomly.
Pair Corralation between Everlight Electronics and United Microelectronics
Assuming the 90 days trading horizon Everlight Electronics Co is expected to generate 1.24 times more return on investment than United Microelectronics. However, Everlight Electronics is 1.24 times more volatile than United Microelectronics. It trades about 0.04 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.07 per unit of risk. If you would invest 7,310 in Everlight Electronics Co on September 3, 2024 and sell it today you would earn a total of 590.00 from holding Everlight Electronics Co or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Everlight Electronics Co vs. United Microelectronics
Performance |
| Timeline |
| Everlight Electronics |
| United Microelectronics |
Everlight Electronics and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Everlight Electronics and United Microelectronics
The main advantage of trading using opposite Everlight Electronics and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everlight Electronics position performs unexpectedly, United Microelectronics 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 United Microelectronics will offset losses from the drop in United Microelectronics' long position.| Everlight Electronics vs. Taiwan Semiconductor Manufacturing | Everlight Electronics vs. Yang Ming Marine | Everlight Electronics vs. ASE Industrial Holding | Everlight Electronics vs. AU Optronics |
| United Microelectronics vs. Taiwan Semiconductor Manufacturing | United Microelectronics vs. Yang Ming Marine | United Microelectronics vs. ASE Industrial Holding | United Microelectronics vs. AU Optronics |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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