Correlation Between Global Unichip and Elan Microelectronics
Can any of the company-specific risk be diversified away by investing in both Global Unichip and Elan 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 Global Unichip and Elan Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Unichip Corp and Elan Microelectronics Corp, you can compare the effects of market volatilities on Global Unichip and Elan 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 Global Unichip with a short position of Elan Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Unichip and Elan Microelectronics.
Diversification Opportunities for Global Unichip and Elan Microelectronics
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Elan is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Global Unichip Corp and Elan Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elan Microelectronics and Global Unichip 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 Global Unichip Corp are associated (or correlated) with Elan Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elan Microelectronics has no effect on the direction of Global Unichip i.e., Global Unichip and Elan Microelectronics go up and down completely randomly.
Pair Corralation between Global Unichip and Elan Microelectronics
Assuming the 90 days trading horizon Global Unichip is expected to generate 1.08 times less return on investment than Elan Microelectronics. In addition to that, Global Unichip is 1.66 times more volatile than Elan Microelectronics Corp. It trades about 0.03 of its total potential returns per unit of risk. Elan Microelectronics Corp is currently generating about 0.06 per unit of volatility. If you would invest 9,847 in Elan Microelectronics Corp on November 27, 2024 and sell it today you would earn a total of 6,153 from holding Elan Microelectronics Corp or generate 62.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Unichip Corp vs. Elan Microelectronics Corp
Performance |
| Timeline |
| Global Unichip Corp |
| Elan Microelectronics |
Global Unichip and Elan Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Unichip and Elan Microelectronics
The main advantage of trading using opposite Global Unichip and Elan Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Unichip position performs unexpectedly, Elan 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 Elan Microelectronics will offset losses from the drop in Elan Microelectronics' long position.| Global Unichip vs. Alchip Technologies | Global Unichip vs. Realtek Semiconductor Corp | Global Unichip vs. Faraday Technology Corp | Global Unichip vs. Novatek Microelectronics Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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