Correlation Between Universal Microelectronics and Space Shuttle
Can any of the company-specific risk be diversified away by investing in both Universal Microelectronics and Space Shuttle 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 Space Shuttle 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 Space Shuttle Hi Tech, you can compare the effects of market volatilities on Universal Microelectronics and Space Shuttle 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 Space Shuttle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Microelectronics and Space Shuttle.
Diversification Opportunities for Universal Microelectronics and Space Shuttle
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Space is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Universal Microelectronics Co and Space Shuttle Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Space Shuttle Hi 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 Space Shuttle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Space Shuttle Hi has no effect on the direction of Universal Microelectronics i.e., Universal Microelectronics and Space Shuttle go up and down completely randomly.
Pair Corralation between Universal Microelectronics and Space Shuttle
Assuming the 90 days trading horizon Universal Microelectronics is expected to generate 2.69 times less return on investment than Space Shuttle. But when comparing it to its historical volatility, Universal Microelectronics Co is 1.7 times less risky than Space Shuttle. It trades about 0.07 of its potential returns per unit of risk. Space Shuttle Hi Tech is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,255 in Space Shuttle Hi Tech on December 27, 2024 and sell it today you would earn a total of 75.00 from holding Space Shuttle Hi Tech or generate 5.98% 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. Space Shuttle Hi Tech
Performance |
| Timeline |
| Universal Microelectronics |
| Space Shuttle Hi |
Universal Microelectronics and Space Shuttle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Microelectronics and Space Shuttle
The main advantage of trading using opposite Universal Microelectronics and Space Shuttle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Microelectronics position performs unexpectedly, Space Shuttle 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 Space Shuttle will offset losses from the drop in Space Shuttle's long position.The idea behind Universal Microelectronics Co and Space Shuttle Hi Tech 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.
| Space Shuttle vs. Universal Microelectronics Co | Space Shuttle vs. Greatek Electronics | Space Shuttle vs. Phihong Technology Co | Space Shuttle vs. Zippy Technology Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |