Correlation Between Young Optics and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Young Optics and United 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 Young Optics and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Young Optics and United Microelectronics, you can compare the effects of market volatilities on Young Optics and United 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 Young Optics with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Optics and United Microelectronics.
Diversification Opportunities for Young Optics and United Microelectronics
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Young and United is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Young Optics and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Young Optics 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 Young Optics are associated (or correlated) with United Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Microelectronics has no effect on the direction of Young Optics i.e., Young Optics and United Microelectronics go up and down completely randomly.
Pair Corralation between Young Optics and United Microelectronics
Assuming the 90 days trading horizon Young Optics is expected to generate 1.17 times more return on investment than United Microelectronics. However, Young Optics is 1.17 times more volatile than United Microelectronics. It trades about 0.02 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.06 per unit of risk. If you would invest 5,520 in Young Optics on September 3, 2024 and sell it today you would earn a total of 90.00 from holding Young Optics or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Young Optics vs. United Microelectronics
Performance |
| Timeline |
| Young Optics |
| United Microelectronics |
Young Optics and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Young Optics and United Microelectronics
The main advantage of trading using opposite Young Optics and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Young Optics position performs unexpectedly, United 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 United Microelectronics will offset losses from the drop in United Microelectronics' long position.| Young Optics vs. Genius Electronic Optical | Young Optics vs. Asia Optical Co | Young Optics vs. Altek Corp | Young Optics vs. Global Unichip Corp |
| United Microelectronics vs. Taiwan Semiconductor Manufacturing | United Microelectronics vs. Yang Ming Marine | United Microelectronics vs. ASE Industrial Holding | United Microelectronics vs. AU Optronics |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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