Correlation Between Universal Microelectronics and San Shing
Can any of the company-specific risk be diversified away by investing in both Universal Microelectronics and San Shing 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 San Shing 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 San Shing Fastech, you can compare the effects of market volatilities on Universal Microelectronics and San Shing 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 San Shing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Microelectronics and San Shing.
Diversification Opportunities for Universal Microelectronics and San Shing
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and San is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Universal Microelectronics Co and San Shing Fastech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Shing Fastech 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 San Shing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Shing Fastech has no effect on the direction of Universal Microelectronics i.e., Universal Microelectronics and San Shing go up and down completely randomly.
Pair Corralation between Universal Microelectronics and San Shing
Assuming the 90 days trading horizon Universal Microelectronics Co is expected to generate 4.71 times more return on investment than San Shing. However, Universal Microelectronics is 4.71 times more volatile than San Shing Fastech. It trades about -0.02 of its potential returns per unit of risk. San Shing Fastech is currently generating about -0.12 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 (65.00) from holding Universal Microelectronics Co or give up 2.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Microelectronics Co vs. San Shing Fastech
Performance |
| Timeline |
| Universal Microelectronics |
| San Shing Fastech |
Universal Microelectronics and San Shing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Microelectronics and San Shing
The main advantage of trading using opposite Universal Microelectronics and San Shing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Microelectronics position performs unexpectedly, San Shing 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 San Shing will offset losses from the drop in San Shing'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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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