Correlation Between First Solar and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both First Solar 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 First Solar and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and United Microelectronics, you can compare the effects of market volatilities on First Solar 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 First Solar with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and United Microelectronics.
Diversification Opportunities for First Solar and United Microelectronics
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and United is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and First Solar 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 First Solar 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 First Solar i.e., First Solar and United Microelectronics go up and down completely randomly.
Pair Corralation between First Solar and United Microelectronics
Given the investment horizon of 90 days First Solar is expected to generate 1.69 times more return on investment than United Microelectronics. However, First Solar is 1.69 times more volatile than United Microelectronics. It trades about 0.05 of its potential returns per unit of risk. United Microelectronics is currently generating about 0.0 per unit of risk. If you would invest 15,389 in First Solar on August 27, 2024 and sell it today you would earn a total of 3,216 from holding First Solar or generate 20.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Solar vs. United Microelectronics
Performance |
| Timeline |
| First Solar |
| United Microelectronics |
First Solar and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and United Microelectronics
The main advantage of trading using opposite First Solar and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar 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.| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar vs. SolarEdge Technologies |
| United Microelectronics vs. Silicon Motion Technology | United Microelectronics vs. ASE Industrial Holding | United Microelectronics vs. ChipMOS Technologies | United Microelectronics vs. SemiLEDS |
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 Stocks Directory module to find actively traded stocks across global markets.
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