Correlation Between Renesas Electronics and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Renesas Electronics 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 Renesas Electronics and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Renesas Electronics and United Microelectronics, you can compare the effects of market volatilities on Renesas Electronics 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 Renesas Electronics with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renesas Electronics and United Microelectronics.
Diversification Opportunities for Renesas Electronics and United Microelectronics
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Renesas and United is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Renesas Electronics and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics i.e., Renesas Electronics and United Microelectronics go up and down completely randomly.
Pair Corralation between Renesas Electronics and United Microelectronics
Assuming the 90 days horizon Renesas Electronics is expected to generate 2.88 times more return on investment than United Microelectronics. However, Renesas Electronics is 2.88 times more volatile than United Microelectronics. It trades about -0.01 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.22 per unit of risk. If you would invest 1,494 in Renesas Electronics on October 24, 2024 and sell it today you would lose (199.00) from holding Renesas Electronics or give up 13.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Renesas Electronics vs. United Microelectronics
Performance |
| Timeline |
| Renesas Electronics |
| United Microelectronics |
Renesas Electronics and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renesas Electronics and United Microelectronics
The main advantage of trading using opposite Renesas Electronics and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renesas Electronics 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.| Renesas Electronics vs. Power Integrations | Renesas Electronics vs. Rohm Co Ltd | Renesas Electronics vs. MACOM Technology Solutions | Renesas Electronics vs. Renesas Electronics Corp |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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