Correlation Between Universal Microelectronics and Allis Electric
Can any of the company-specific risk be diversified away by investing in both Universal Microelectronics and Allis Electric 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 Universal Microelectronics and Allis Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Microelectronics Co and Allis Electric Co, you can compare the effects of market volatilities on Universal Microelectronics and Allis Electric 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 Universal Microelectronics with a short position of Allis Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Microelectronics and Allis Electric.
Diversification Opportunities for Universal Microelectronics and Allis Electric
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and Allis is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Universal Microelectronics Co and Allis Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allis Electric and Universal 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 Universal Microelectronics Co are associated (or correlated) with Allis Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allis Electric has no effect on the direction of Universal Microelectronics i.e., Universal Microelectronics and Allis Electric go up and down completely randomly.
Pair Corralation between Universal Microelectronics and Allis Electric
Assuming the 90 days trading horizon Universal Microelectronics is expected to generate 11.46 times less return on investment than Allis Electric. But when comparing it to its historical volatility, Universal Microelectronics Co is 1.31 times less risky than Allis Electric. It trades about 0.01 of its potential returns per unit of risk. Allis Electric Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,945 in Allis Electric Co on September 12, 2024 and sell it today you would earn a total of 7,755 from holding Allis Electric Co or generate 263.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Microelectronics Co vs. Allis Electric Co
Performance |
| Timeline |
| Universal Microelectronics |
| Allis Electric |
Universal Microelectronics and Allis Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Microelectronics and Allis Electric
The main advantage of trading using opposite Universal Microelectronics and Allis Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Microelectronics position performs unexpectedly, Allis Electric 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 Allis Electric will offset losses from the drop in Allis Electric's long position.| Universal Microelectronics vs. AU Optronics | Universal Microelectronics vs. Innolux Corp | Universal Microelectronics vs. Ruentex Development Co | Universal Microelectronics vs. WiseChip Semiconductor |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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