Correlation Between Universal Microelectronics and Tong Tai
Can any of the company-specific risk be diversified away by investing in both Universal Microelectronics and Tong Tai 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 Tong Tai 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 Tong Tai Machine Tool, you can compare the effects of market volatilities on Universal Microelectronics and Tong Tai 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 Tong Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Microelectronics and Tong Tai.
Diversification Opportunities for Universal Microelectronics and Tong Tai
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Tong is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Universal Microelectronics Co and Tong Tai Machine Tool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Tai Machine 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 Tong Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Tai Machine has no effect on the direction of Universal Microelectronics i.e., Universal Microelectronics and Tong Tai go up and down completely randomly.
Pair Corralation between Universal Microelectronics and Tong Tai
Assuming the 90 days trading horizon Universal Microelectronics Co is expected to under-perform the Tong Tai. But the stock apears to be less risky and, when comparing its historical volatility, Universal Microelectronics Co is 1.24 times less risky than Tong Tai. The stock trades about -0.09 of its potential returns per unit of risk. The Tong Tai Machine Tool is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,155 in Tong Tai Machine Tool on September 4, 2024 and sell it today you would earn a total of 20.00 from holding Tong Tai Machine Tool or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Microelectronics Co vs. Tong Tai Machine Tool
Performance |
| Timeline |
| Universal Microelectronics |
| Tong Tai Machine |
Universal Microelectronics and Tong Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Microelectronics and Tong Tai
The main advantage of trading using opposite Universal Microelectronics and Tong Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Microelectronics position performs unexpectedly, Tong Tai 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 Tong Tai will offset losses from the drop in Tong Tai'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 |
| Tong Tai vs. Universal Microelectronics Co | Tong Tai vs. AVerMedia Technologies | Tong Tai vs. Symtek Automation Asia | Tong Tai 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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