Correlation Between New Asia and Universal Microelectronics
Can any of the company-specific risk be diversified away by investing in both New Asia and Universal Microelectronics 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 New Asia and Universal Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Asia Construction and Universal Microelectronics Co, you can compare the effects of market volatilities on New Asia and Universal Microelectronics 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 New Asia with a short position of Universal Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Asia and Universal Microelectronics.
Diversification Opportunities for New Asia and Universal Microelectronics
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Universal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding New Asia Construction and Universal Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Microelectronics and New Asia 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 New Asia Construction are associated (or correlated) with Universal Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Microelectronics has no effect on the direction of New Asia i.e., New Asia and Universal Microelectronics go up and down completely randomly.
Pair Corralation between New Asia and Universal Microelectronics
Assuming the 90 days trading horizon New Asia Construction is expected to generate 0.57 times more return on investment than Universal Microelectronics. However, New Asia Construction is 1.77 times less risky than Universal Microelectronics. It trades about 0.31 of its potential returns per unit of risk. Universal Microelectronics Co is currently generating about -0.09 per unit of risk. If you would invest 1,235 in New Asia Construction on September 4, 2024 and sell it today you would earn a total of 145.00 from holding New Asia Construction or generate 11.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Asia Construction vs. Universal Microelectronics Co
Performance |
| Timeline |
| New Asia Construction |
| Universal Microelectronics |
New Asia and Universal Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Asia and Universal Microelectronics
The main advantage of trading using opposite New Asia and Universal Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Asia position performs unexpectedly, Universal Microelectronics 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 Universal Microelectronics will offset losses from the drop in Universal Microelectronics' long position.| New Asia vs. Universal Microelectronics Co | New Asia vs. AVerMedia Technologies | New Asia vs. Symtek Automation Asia | New Asia vs. WiseChip Semiconductor |
| Universal Microelectronics vs. Taiwan Semiconductor Manufacturing | Universal Microelectronics vs. Yang Ming Marine | Universal Microelectronics vs. AU Optronics | Universal Microelectronics vs. Innolux 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |