Correlation Between Universal Microelectronics and Goodway Machine
Can any of the company-specific risk be diversified away by investing in both Universal Microelectronics and Goodway Machine 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 Goodway Machine 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 Goodway Machine Corp, you can compare the effects of market volatilities on Universal Microelectronics and Goodway Machine 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 Goodway Machine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Microelectronics and Goodway Machine.
Diversification Opportunities for Universal Microelectronics and Goodway Machine
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and Goodway is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Universal Microelectronics Co and Goodway Machine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodway Machine 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 Goodway Machine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodway Machine Corp has no effect on the direction of Universal Microelectronics i.e., Universal Microelectronics and Goodway Machine go up and down completely randomly.
Pair Corralation between Universal Microelectronics and Goodway Machine
Assuming the 90 days trading horizon Universal Microelectronics Co is expected to generate 2.91 times more return on investment than Goodway Machine. However, Universal Microelectronics is 2.91 times more volatile than Goodway Machine Corp. It trades about -0.03 of its potential returns per unit of risk. Goodway Machine Corp is currently generating about -0.09 per unit of risk. If you would invest 2,650 in Universal Microelectronics Co on September 12, 2024 and sell it today you would lose (90.00) from holding Universal Microelectronics Co or give up 3.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Universal Microelectronics Co vs. Goodway Machine Corp
Performance |
| Timeline |
| Universal Microelectronics |
| Goodway Machine Corp |
Universal Microelectronics and Goodway Machine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Microelectronics and Goodway Machine
The main advantage of trading using opposite Universal Microelectronics and Goodway Machine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Microelectronics position performs unexpectedly, Goodway Machine 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 Goodway Machine will offset losses from the drop in Goodway Machine'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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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