Correlation Between Powertech Industrial and Universal Microelectronics
Can any of the company-specific risk be diversified away by investing in both Powertech Industrial 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 Powertech Industrial and Universal Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powertech Industrial Co and Universal Microelectronics Co, you can compare the effects of market volatilities on Powertech Industrial 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 Powertech Industrial with a short position of Universal Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powertech Industrial and Universal Microelectronics.
Diversification Opportunities for Powertech Industrial and Universal Microelectronics
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Powertech and Universal is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Powertech Industrial Co and Universal Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Microelectronics and Powertech Industrial 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 Powertech Industrial Co 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 Powertech Industrial i.e., Powertech Industrial and Universal Microelectronics go up and down completely randomly.
Pair Corralation between Powertech Industrial and Universal Microelectronics
Assuming the 90 days trading horizon Powertech Industrial Co is expected to generate 1.32 times more return on investment than Universal Microelectronics. However, Powertech Industrial is 1.32 times more volatile than Universal Microelectronics Co. It trades about 0.1 of its potential returns per unit of risk. Universal Microelectronics Co is currently generating about -0.01 per unit of risk. If you would invest 1,690 in Powertech Industrial Co on September 4, 2024 and sell it today you would earn a total of 1,415 from holding Powertech Industrial Co or generate 83.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Powertech Industrial Co vs. Universal Microelectronics Co
Performance |
| Timeline |
| Powertech Industrial |
| Universal Microelectronics |
Powertech Industrial and Universal Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powertech Industrial and Universal Microelectronics
The main advantage of trading using opposite Powertech Industrial and Universal Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powertech Industrial 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.| Powertech Industrial vs. Universal Microelectronics Co | Powertech Industrial vs. AVerMedia Technologies | Powertech Industrial vs. Symtek Automation Asia | Powertech Industrial 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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