Correlation Between Electronic Arts and UMC Electronics
Can any of the company-specific risk be diversified away by investing in both Electronic Arts 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 Electronic Arts and UMC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and UMC Electronics Co, you can compare the effects of market volatilities on Electronic Arts 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 Electronic Arts with a short position of UMC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and UMC Electronics.
Diversification Opportunities for Electronic Arts and UMC Electronics
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Electronic and UMC is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and UMC Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMC Electronics and Electronic Arts 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 Electronic Arts 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 Electronic Arts i.e., Electronic Arts and UMC Electronics go up and down completely randomly.
Pair Corralation between Electronic Arts and UMC Electronics
Assuming the 90 days trading horizon Electronic Arts is expected to under-perform the UMC Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Electronic Arts is 1.34 times less risky than UMC Electronics. The stock trades about -0.04 of its potential returns per unit of risk. The UMC Electronics Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 208.00 in UMC Electronics Co on November 7, 2024 and sell it today you would lose (28.00) from holding UMC Electronics Co or give up 13.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Electronic Arts vs. UMC Electronics Co
Performance |
| Timeline |
| Electronic Arts |
| UMC Electronics |
Electronic Arts and UMC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and UMC Electronics
The main advantage of trading using opposite Electronic Arts and UMC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts 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.| Electronic Arts vs. URBAN OUTFITTERS | Electronic Arts vs. VIVA WINE GROUP | Electronic Arts vs. G III APPAREL GROUP | Electronic Arts vs. IMPERIAL TOBACCO |
| UMC Electronics vs. ARDAGH METAL PACDL 0001 | UMC Electronics vs. BlueScope Steel Limited | UMC Electronics vs. MAANSHAN IRON H | UMC Electronics vs. ANGANG STEEL H |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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