Correlation Between INTER CARS and UMC Electronics
Can any of the company-specific risk be diversified away by investing in both INTER CARS and UMC Electronics 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 INTER CARS and UMC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTER CARS SA and UMC Electronics Co, you can compare the effects of market volatilities on INTER CARS and UMC Electronics 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 INTER CARS with a short position of UMC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and UMC Electronics.
Diversification Opportunities for INTER CARS and UMC Electronics
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INTER and UMC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and UMC Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMC Electronics and INTER CARS 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 INTER CARS SA are associated (or correlated) with UMC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMC Electronics has no effect on the direction of INTER CARS i.e., INTER CARS and UMC Electronics go up and down completely randomly.
Pair Corralation between INTER CARS and UMC Electronics
Assuming the 90 days horizon INTER CARS SA is expected to generate 0.87 times more return on investment than UMC Electronics. However, INTER CARS SA is 1.15 times less risky than UMC Electronics. It trades about 0.02 of its potential returns per unit of risk. UMC Electronics Co is currently generating about -0.03 per unit of risk. If you would invest 9,831 in INTER CARS SA on September 4, 2024 and sell it today you would earn a total of 1,369 from holding INTER CARS SA or generate 13.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTER CARS SA vs. UMC Electronics Co
Performance |
| Timeline |
| INTER CARS SA |
| UMC Electronics |
INTER CARS and UMC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and UMC Electronics
The main advantage of trading using opposite INTER CARS and UMC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS position performs unexpectedly, UMC Electronics 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 UMC Electronics will offset losses from the drop in UMC Electronics' long position.| INTER CARS vs. Dno ASA | INTER CARS vs. PT Astra International | INTER CARS vs. Superior Plus Corp | INTER CARS vs. NMI Holdings |
| UMC Electronics vs. Hon Hai Precision | UMC Electronics vs. Samsung SDI Co | UMC Electronics vs. Murata Manufacturing Co | UMC Electronics vs. Mitsubishi Electric |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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