Correlation Between Kinko Optical and Universal Microelectronics
Can any of the company-specific risk be diversified away by investing in both Kinko Optical 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 Kinko Optical and Universal Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinko Optical Co and Universal Microelectronics Co, you can compare the effects of market volatilities on Kinko Optical 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 Kinko Optical with a short position of Universal Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinko Optical and Universal Microelectronics.
Diversification Opportunities for Kinko Optical and Universal Microelectronics
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kinko and Universal is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Kinko Optical Co and Universal Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Microelectronics and Kinko Optical 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 Kinko Optical Co 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 Kinko Optical i.e., Kinko Optical and Universal Microelectronics go up and down completely randomly.
Pair Corralation between Kinko Optical and Universal Microelectronics
Assuming the 90 days trading horizon Kinko Optical is expected to generate 6.8 times less return on investment than Universal Microelectronics. But when comparing it to its historical volatility, Kinko Optical Co is 1.15 times less risky than Universal Microelectronics. It trades about 0.01 of its potential returns per unit of risk. Universal Microelectronics Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,425 in Universal Microelectronics Co on September 3, 2024 and sell it today you would earn a total of 215.00 from holding Universal Microelectronics Co or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinko Optical Co vs. Universal Microelectronics Co
Performance |
| Timeline |
| Kinko Optical |
| Universal Microelectronics |
Kinko Optical and Universal Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinko Optical and Universal Microelectronics
The main advantage of trading using opposite Kinko Optical and Universal Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinko Optical 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.| Kinko Optical vs. Asia Optical Co | Kinko Optical vs. Genius Electronic Optical | Kinko Optical vs. Altek Corp | Kinko Optical vs. Hannstar Display 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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