Correlation Between Shenmao Technology and Universal Microelectronics
Can any of the company-specific risk be diversified away by investing in both Shenmao Technology 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 Shenmao Technology and Universal Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenmao Technology and Universal Microelectronics Co, you can compare the effects of market volatilities on Shenmao Technology 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 Shenmao Technology with a short position of Universal Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenmao Technology and Universal Microelectronics.
Diversification Opportunities for Shenmao Technology and Universal Microelectronics
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shenmao and Universal is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shenmao Technology and Universal Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Microelectronics and Shenmao 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 Shenmao Technology 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 Shenmao Technology i.e., Shenmao Technology and Universal Microelectronics go up and down completely randomly.
Pair Corralation between Shenmao Technology and Universal Microelectronics
Assuming the 90 days trading horizon Shenmao Technology is expected to under-perform the Universal Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Shenmao Technology is 1.88 times less risky than Universal Microelectronics. The stock trades about -0.09 of its potential returns per unit of risk. The Universal Microelectronics Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,650 in Universal Microelectronics Co on September 12, 2024 and sell it today you would lose (90.00) from holding Universal Microelectronics Co or give up 3.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenmao Technology vs. Universal Microelectronics Co
Performance |
| Timeline |
| Shenmao Technology |
| Universal Microelectronics |
Shenmao Technology and Universal Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenmao Technology and Universal Microelectronics
The main advantage of trading using opposite Shenmao Technology and Universal Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenmao Technology 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.| Shenmao Technology vs. Arcadyan Technology Corp | Shenmao Technology vs. Asia Vital Components | Shenmao Technology vs. WPG Holdings | Shenmao Technology vs. Genius Electronic Optical |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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