Correlation Between Universal Microelectronics and Rexon Industrial
Can any of the company-specific risk be diversified away by investing in both Universal Microelectronics and Rexon Industrial 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 Rexon Industrial 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 Rexon Industrial Corp, you can compare the effects of market volatilities on Universal Microelectronics and Rexon Industrial 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 Rexon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Microelectronics and Rexon Industrial.
Diversification Opportunities for Universal Microelectronics and Rexon Industrial
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and Rexon is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Universal Microelectronics Co and Rexon Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rexon Industrial Corp 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 Rexon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rexon Industrial Corp has no effect on the direction of Universal Microelectronics i.e., Universal Microelectronics and Rexon Industrial go up and down completely randomly.
Pair Corralation between Universal Microelectronics and Rexon Industrial
Assuming the 90 days trading horizon Universal Microelectronics is expected to generate 1.47 times less return on investment than Rexon Industrial. In addition to that, Universal Microelectronics is 1.06 times more volatile than Rexon Industrial Corp. It trades about 0.01 of its total potential returns per unit of risk. Rexon Industrial Corp is currently generating about 0.01 per unit of volatility. If you would invest 3,330 in Rexon Industrial Corp on September 5, 2024 and sell it today you would lose (140.00) from holding Rexon Industrial Corp or give up 4.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Microelectronics Co vs. Rexon Industrial Corp
Performance |
| Timeline |
| Universal Microelectronics |
| Rexon Industrial Corp |
Universal Microelectronics and Rexon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Microelectronics and Rexon Industrial
The main advantage of trading using opposite Universal Microelectronics and Rexon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Microelectronics position performs unexpectedly, Rexon Industrial 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 Rexon Industrial will offset losses from the drop in Rexon Industrial's long position.The idea behind Universal Microelectronics Co and Rexon Industrial Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Rexon Industrial vs. Universal Microelectronics Co | Rexon Industrial vs. AVerMedia Technologies | Rexon Industrial vs. Symtek Automation Asia | Rexon Industrial vs. WiseChip Semiconductor |
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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