Correlation Between Universal Microelectronics and Hiwin Technologies
Can any of the company-specific risk be diversified away by investing in both Universal Microelectronics and Hiwin Technologies 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 Hiwin Technologies 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 Hiwin Technologies Corp, you can compare the effects of market volatilities on Universal Microelectronics and Hiwin Technologies 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 Hiwin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Microelectronics and Hiwin Technologies.
Diversification Opportunities for Universal Microelectronics and Hiwin Technologies
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Hiwin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Universal Microelectronics Co and Hiwin Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiwin Technologies 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 Hiwin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiwin Technologies Corp has no effect on the direction of Universal Microelectronics i.e., Universal Microelectronics and Hiwin Technologies go up and down completely randomly.
Pair Corralation between Universal Microelectronics and Hiwin Technologies
Assuming the 90 days trading horizon Universal Microelectronics Co is expected to generate 1.21 times more return on investment than Hiwin Technologies. However, Universal Microelectronics is 1.21 times more volatile than Hiwin Technologies Corp. It trades about 0.03 of its potential returns per unit of risk. Hiwin Technologies Corp is currently generating about 0.01 per unit of risk. If you would invest 2,425 in Universal Microelectronics Co on September 3, 2024 and sell it today you would earn a total of 215.00 from holding Universal Microelectronics Co or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Microelectronics Co vs. Hiwin Technologies Corp
Performance |
| Timeline |
| Universal Microelectronics |
| Hiwin Technologies Corp |
Universal Microelectronics and Hiwin Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Microelectronics and Hiwin Technologies
The main advantage of trading using opposite Universal Microelectronics and Hiwin Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Microelectronics position performs unexpectedly, Hiwin Technologies 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 Hiwin Technologies will offset losses from the drop in Hiwin Technologies' long position.The idea behind Universal Microelectronics Co and Hiwin Technologies 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.
| Hiwin Technologies vs. Universal Microelectronics Co | Hiwin Technologies vs. AVerMedia Technologies | Hiwin Technologies vs. Symtek Automation Asia | Hiwin Technologies 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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