Correlation Between Unimicron Technology and Para Light
Can any of the company-specific risk be diversified away by investing in both Unimicron Technology and Para Light 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 Para Light 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 Para Light Electronics, you can compare the effects of market volatilities on Unimicron Technology and Para Light 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 Para Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unimicron Technology and Para Light.
Diversification Opportunities for Unimicron Technology and Para Light
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Unimicron and Para is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Unimicron Technology Corp and Para Light Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Para Light Electronics 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 Para Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Para Light Electronics has no effect on the direction of Unimicron Technology i.e., Unimicron Technology and Para Light go up and down completely randomly.
Pair Corralation between Unimicron Technology and Para Light
Assuming the 90 days trading horizon Unimicron Technology Corp is expected to under-perform the Para Light. In addition to that, Unimicron Technology is 1.97 times more volatile than Para Light Electronics. It trades about -0.25 of its total potential returns per unit of risk. Para Light Electronics is currently generating about -0.1 per unit of volatility. If you would invest 866.00 in Para Light Electronics on November 4, 2024 and sell it today you would lose (13.00) from holding Para Light Electronics or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unimicron Technology Corp vs. Para Light Electronics
Performance |
| Timeline |
| Unimicron Technology Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Para Light Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Unimicron Technology and Para Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unimicron Technology and Para Light
The main advantage of trading using opposite Unimicron Technology and Para Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unimicron Technology position performs unexpectedly, Para Light 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 Para Light will offset losses from the drop in Para Light's long position.The idea behind Unimicron Technology Corp and Para Light Electronics 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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