Correlation Between Unimicron Technology and Yageo Corp
Can any of the company-specific risk be diversified away by investing in both Unimicron Technology and Yageo Corp 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 Unimicron Technology and Yageo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unimicron Technology Corp and Yageo Corp, you can compare the effects of market volatilities on Unimicron Technology and Yageo Corp 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 Unimicron Technology with a short position of Yageo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unimicron Technology and Yageo Corp.
Diversification Opportunities for Unimicron Technology and Yageo Corp
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Unimicron and Yageo is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Unimicron Technology Corp and Yageo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yageo Corp and Unimicron Technology 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 Unimicron Technology Corp are associated (or correlated) with Yageo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yageo Corp has no effect on the direction of Unimicron Technology i.e., Unimicron Technology and Yageo Corp go up and down completely randomly.
Pair Corralation between Unimicron Technology and Yageo Corp
Assuming the 90 days trading horizon Unimicron Technology Corp is expected to generate 1.23 times more return on investment than Yageo Corp. However, Unimicron Technology is 1.23 times more volatile than Yageo Corp. It trades about -0.04 of its potential returns per unit of risk. Yageo Corp is currently generating about -0.07 per unit of risk. If you would invest 18,750 in Unimicron Technology Corp on September 2, 2024 and sell it today you would lose (3,850) from holding Unimicron Technology Corp or give up 20.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unimicron Technology Corp vs. Yageo Corp
Performance |
| Timeline |
| Unimicron Technology Corp |
| Yageo Corp |
Unimicron Technology and Yageo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unimicron Technology and Yageo Corp
The main advantage of trading using opposite Unimicron Technology and Yageo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unimicron Technology position performs unexpectedly, Yageo Corp 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 Yageo Corp will offset losses from the drop in Yageo Corp's long position.The idea behind Unimicron Technology Corp and Yageo Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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