Correlation Between Universal Microelectronics and Taiwan Shin
Can any of the company-specific risk be diversified away by investing in both Universal Microelectronics and Taiwan Shin 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 Taiwan Shin 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 Taiwan Shin Kong, you can compare the effects of market volatilities on Universal Microelectronics and Taiwan Shin 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 Taiwan Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Microelectronics and Taiwan Shin.
Diversification Opportunities for Universal Microelectronics and Taiwan Shin
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Universal and Taiwan is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Universal Microelectronics Co and Taiwan Shin Kong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Shin Kong 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 Taiwan Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Shin Kong has no effect on the direction of Universal Microelectronics i.e., Universal Microelectronics and Taiwan Shin go up and down completely randomly.
Pair Corralation between Universal Microelectronics and Taiwan Shin
Assuming the 90 days trading horizon Universal Microelectronics Co is expected to under-perform the Taiwan Shin. In addition to that, Universal Microelectronics is 7.37 times more volatile than Taiwan Shin Kong. It trades about -0.09 of its total potential returns per unit of risk. Taiwan Shin Kong is currently generating about -0.08 per unit of volatility. If you would invest 4,140 in Taiwan Shin Kong on September 4, 2024 and sell it today you would lose (30.00) from holding Taiwan Shin Kong or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Microelectronics Co vs. Taiwan Shin Kong
Performance |
| Timeline |
| Universal Microelectronics |
| Taiwan Shin Kong |
Universal Microelectronics and Taiwan Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Microelectronics and Taiwan Shin
The main advantage of trading using opposite Universal Microelectronics and Taiwan Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Microelectronics position performs unexpectedly, Taiwan Shin 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 Taiwan Shin will offset losses from the drop in Taiwan Shin'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 |
| Taiwan Shin vs. Universal Microelectronics Co | Taiwan Shin vs. AVerMedia Technologies | Taiwan Shin vs. Symtek Automation Asia | Taiwan Shin 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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