Correlation Between DATAGROUP and UMC Electronics
Can any of the company-specific risk be diversified away by investing in both DATAGROUP 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 DATAGROUP and UMC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DATAGROUP SE and UMC Electronics Co, you can compare the effects of market volatilities on DATAGROUP 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 DATAGROUP with a short position of UMC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATAGROUP and UMC Electronics.
Diversification Opportunities for DATAGROUP and UMC Electronics
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DATAGROUP and UMC is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding DATAGROUP SE and UMC Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMC Electronics and DATAGROUP 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 DATAGROUP SE 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 DATAGROUP i.e., DATAGROUP and UMC Electronics go up and down completely randomly.
Pair Corralation between DATAGROUP and UMC Electronics
Assuming the 90 days trading horizon DATAGROUP SE is expected to generate 0.79 times more return on investment than UMC Electronics. However, DATAGROUP SE is 1.26 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 -0.04 per unit of risk. If you would invest 6,159 in DATAGROUP SE on September 13, 2024 and sell it today you would lose (1,559) from holding DATAGROUP SE or give up 25.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DATAGROUP SE vs. UMC Electronics Co
Performance |
| Timeline |
| DATAGROUP SE |
| UMC Electronics |
DATAGROUP and UMC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DATAGROUP and UMC Electronics
The main advantage of trading using opposite DATAGROUP and UMC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATAGROUP 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.| DATAGROUP vs. Cognizant Technology Solutions | DATAGROUP vs. Superior Plus Corp | DATAGROUP vs. SIVERS SEMICONDUCTORS AB | DATAGROUP vs. Norsk Hydro ASA |
| UMC Electronics vs. Sunny Optical Technology | UMC Electronics vs. Hubbell Incorporated | UMC Electronics vs. TDK Corporation | UMC Electronics vs. Superior Plus 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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