Correlation Between Shin Ruenn and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Shin Ruenn 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 Shin Ruenn and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Ruenn Development and United Microelectronics, you can compare the effects of market volatilities on Shin Ruenn 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 Shin Ruenn with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Ruenn and United Microelectronics.
Diversification Opportunities for Shin Ruenn and United Microelectronics
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shin and United is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Shin Ruenn Development and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Shin Ruenn 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 Shin Ruenn Development 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 Shin Ruenn i.e., Shin Ruenn and United Microelectronics go up and down completely randomly.
Pair Corralation between Shin Ruenn and United Microelectronics
Assuming the 90 days trading horizon Shin Ruenn Development is expected to generate 1.36 times more return on investment than United Microelectronics. However, Shin Ruenn is 1.36 times more volatile than United Microelectronics. It trades about 0.07 of its potential returns per unit of risk. United Microelectronics is currently generating about 0.01 per unit of risk. If you would invest 3,620 in Shin Ruenn Development on August 31, 2024 and sell it today you would earn a total of 2,820 from holding Shin Ruenn Development or generate 77.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Ruenn Development vs. United Microelectronics
Performance |
| Timeline |
| Shin Ruenn Development |
| United Microelectronics |
Shin Ruenn and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Ruenn and United Microelectronics
The main advantage of trading using opposite Shin Ruenn and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Ruenn 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.| Shin Ruenn vs. Highwealth Construction Corp | Shin Ruenn vs. Sakura Development Co | Shin Ruenn vs. Kunyue Development Co |
| United Microelectronics vs. AU Optronics | United Microelectronics vs. Macronix International Co | United Microelectronics vs. Winbond Electronics Corp | United Microelectronics vs. Hon Hai Precision |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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