Correlation Between Tong Tai and Universal Microelectronics
Can any of the company-specific risk be diversified away by investing in both Tong Tai 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 Tong Tai and Universal Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tong Tai Machine Tool and Universal Microelectronics Co, you can compare the effects of market volatilities on Tong Tai 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 Tong Tai with a short position of Universal Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Tai and Universal Microelectronics.
Diversification Opportunities for Tong Tai and Universal Microelectronics
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tong and Universal is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tong Tai Machine Tool and Universal Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Microelectronics and Tong Tai 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 Tong Tai Machine Tool 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 Tong Tai i.e., Tong Tai and Universal Microelectronics go up and down completely randomly.
Pair Corralation between Tong Tai and Universal Microelectronics
Assuming the 90 days trading horizon Tong Tai Machine Tool is expected to generate 1.36 times more return on investment than Universal Microelectronics. However, Tong Tai is 1.36 times more volatile than Universal Microelectronics Co. It trades about 0.07 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 1,625 in Tong Tai Machine Tool on September 4, 2024 and sell it today you would earn a total of 1,550 from holding Tong Tai Machine Tool or generate 95.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tong Tai Machine Tool vs. Universal Microelectronics Co
Performance |
| Timeline |
| Tong Tai Machine |
| Universal Microelectronics |
Tong Tai and Universal Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tong Tai and Universal Microelectronics
The main advantage of trading using opposite Tong Tai and Universal Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Tai 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.| Tong Tai vs. Universal Microelectronics Co | Tong Tai vs. AVerMedia Technologies | Tong Tai vs. Symtek Automation Asia | Tong Tai 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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