Correlation Between Celestica and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Celestica 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 Celestica and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celestica and United Microelectronics, you can compare the effects of market volatilities on Celestica 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 Celestica with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celestica and United Microelectronics.
Diversification Opportunities for Celestica and United Microelectronics
-0.96 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Celestica and United is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Celestica 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 Celestica 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 Celestica i.e., Celestica and United Microelectronics go up and down completely randomly.
Pair Corralation between Celestica and United Microelectronics
Considering the 90-day investment horizon Celestica is expected to generate 2.56 times more return on investment than United Microelectronics. However, Celestica is 2.56 times more volatile than United Microelectronics. It trades about 0.23 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.31 per unit of risk. If you would invest 8,397 in Celestica on September 19, 2024 and sell it today you would earn a total of 1,384 from holding Celestica or generate 16.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Celestica vs. United Microelectronics
Performance |
| Timeline |
| Celestica |
| United Microelectronics |
Celestica and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celestica and United Microelectronics
The main advantage of trading using opposite Celestica and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica 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.| Celestica vs. IONQ Inc | Celestica vs. Quantum | Celestica vs. Super Micro Computer | Celestica vs. Red Cat Holdings |
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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