Correlation Between Himax Technologies and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Himax Technologies 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 Himax Technologies and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Himax Technologies and United Microelectronics, you can compare the effects of market volatilities on Himax Technologies 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 Himax Technologies with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Himax Technologies and United Microelectronics.
Diversification Opportunities for Himax Technologies and United Microelectronics
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Himax and United is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Himax Technologies and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Himax Technologies 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 Himax Technologies 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 Himax Technologies i.e., Himax Technologies and United Microelectronics go up and down completely randomly.
Pair Corralation between Himax Technologies and United Microelectronics
Given the investment horizon of 90 days Himax Technologies is expected to under-perform the United Microelectronics. In addition to that, Himax Technologies is 1.02 times more volatile than United Microelectronics. It trades about -0.3 of its total potential returns per unit of risk. United Microelectronics is currently generating about -0.17 per unit of volatility. If you would invest 742.00 in United Microelectronics on August 27, 2024 and sell it today you would lose (55.00) from holding United Microelectronics or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Himax Technologies vs. United Microelectronics
Performance |
| Timeline |
| Himax Technologies |
| United Microelectronics |
Himax Technologies and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Himax Technologies and United Microelectronics
The main advantage of trading using opposite Himax Technologies and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Himax Technologies 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.| Himax Technologies vs. ASE Industrial Holding | Himax Technologies vs. United Microelectronics | Himax Technologies vs. MaxLinear | Himax Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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