Correlation Between Universal Microelectronics and Powertech Industrial
Can any of the company-specific risk be diversified away by investing in both Universal Microelectronics and Powertech 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 Powertech 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 Powertech Industrial Co, you can compare the effects of market volatilities on Universal Microelectronics and Powertech 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 Powertech Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Microelectronics and Powertech Industrial.
Diversification Opportunities for Universal Microelectronics and Powertech Industrial
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and Powertech is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Universal Microelectronics Co and Powertech Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powertech Industrial 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 Powertech Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powertech Industrial has no effect on the direction of Universal Microelectronics i.e., Universal Microelectronics and Powertech Industrial go up and down completely randomly.
Pair Corralation between Universal Microelectronics and Powertech Industrial
Assuming the 90 days trading horizon Universal Microelectronics is expected to generate 13.09 times less return on investment than Powertech Industrial. But when comparing it to its historical volatility, Universal Microelectronics Co is 1.02 times less risky than Powertech Industrial. It trades about 0.01 of its potential returns per unit of risk. Powertech Industrial Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,620 in Powertech Industrial Co on September 4, 2024 and sell it today you would earn a total of 1,485 from holding Powertech Industrial Co or generate 91.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Microelectronics Co vs. Powertech Industrial Co
Performance |
| Timeline |
| Universal Microelectronics |
| Powertech Industrial |
Universal Microelectronics and Powertech Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Microelectronics and Powertech Industrial
The main advantage of trading using opposite Universal Microelectronics and Powertech Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Microelectronics position performs unexpectedly, Powertech 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 Powertech Industrial will offset losses from the drop in Powertech Industrial's long position.| Universal Microelectronics vs. Taiwan Semiconductor Manufacturing | Universal Microelectronics vs. Yang Ming Marine | Universal Microelectronics vs. AU Optronics | Universal Microelectronics vs. Innolux Corp |
| Powertech Industrial vs. Universal Microelectronics Co | Powertech Industrial vs. AVerMedia Technologies | Powertech Industrial vs. Symtek Automation Asia | Powertech 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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