Correlation Between Evergreen Marine and Universal Microelectronics
Can any of the company-specific risk be diversified away by investing in both Evergreen Marine 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 Evergreen Marine and Universal Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evergreen Marine Corp and Universal Microelectronics Co, you can compare the effects of market volatilities on Evergreen Marine 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 Evergreen Marine with a short position of Universal Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Marine and Universal Microelectronics.
Diversification Opportunities for Evergreen Marine and Universal Microelectronics
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Evergreen and Universal is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Marine Corp and Universal Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Microelectronics and Evergreen Marine 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 Evergreen Marine Corp 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 Evergreen Marine i.e., Evergreen Marine and Universal Microelectronics go up and down completely randomly.
Pair Corralation between Evergreen Marine and Universal Microelectronics
Assuming the 90 days trading horizon Evergreen Marine Corp is expected to generate 0.79 times more return on investment than Universal Microelectronics. However, Evergreen Marine Corp is 1.26 times less risky than Universal Microelectronics. It trades about 0.09 of its potential returns per unit of risk. Universal Microelectronics Co is currently generating about -0.03 per unit of risk. If you would invest 22,050 in Evergreen Marine Corp on September 12, 2024 and sell it today you would earn a total of 1,050 from holding Evergreen Marine Corp or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Evergreen Marine Corp vs. Universal Microelectronics Co
Performance |
| Timeline |
| Evergreen Marine Corp |
| Universal Microelectronics |
Evergreen Marine and Universal Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen Marine and Universal Microelectronics
The main advantage of trading using opposite Evergreen Marine and Universal Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen Marine 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.| Evergreen Marine vs. Yang Ming Marine | Evergreen Marine vs. Wan Hai Lines | Evergreen Marine vs. Eva Airways Corp | Evergreen Marine vs. China Airlines |
| Universal Microelectronics vs. AU Optronics | Universal Microelectronics vs. Innolux Corp | Universal Microelectronics vs. Ruentex Development Co | Universal Microelectronics 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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