Correlation Between Shin Etsu and UMC Electronics
Can any of the company-specific risk be diversified away by investing in both Shin Etsu 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 Shin Etsu and UMC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Etsu Chemical Co and UMC Electronics Co, you can compare the effects of market volatilities on Shin Etsu 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 Shin Etsu with a short position of UMC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Etsu and UMC Electronics.
Diversification Opportunities for Shin Etsu and UMC Electronics
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shin and UMC is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and UMC Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMC Electronics and Shin Etsu 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 Shin Etsu Chemical Co 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 Shin Etsu i.e., Shin Etsu and UMC Electronics go up and down completely randomly.
Pair Corralation between Shin Etsu and UMC Electronics
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to under-perform the UMC Electronics. In addition to that, Shin Etsu is 1.23 times more volatile than UMC Electronics Co. It trades about -0.18 of its total potential returns per unit of risk. UMC Electronics Co is currently generating about -0.02 per unit of volatility. If you would invest 183.00 in UMC Electronics Co on November 8, 2024 and sell it today you would lose (2.00) from holding UMC Electronics Co or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. UMC Electronics Co
Performance |
| Timeline |
| Shin Etsu Chemical |
| UMC Electronics |
Shin Etsu and UMC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Etsu and UMC Electronics
The main advantage of trading using opposite Shin Etsu and UMC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Etsu 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.| Shin Etsu vs. Neinor Homes SA | Shin Etsu vs. CITY OFFICE REIT | Shin Etsu vs. Actinogen Medical Limited | Shin Etsu vs. PULSION Medical Systems |
| UMC Electronics vs. IDP EDUCATION LTD | UMC Electronics vs. American Public Education | UMC Electronics vs. MCEWEN MINING INC | UMC Electronics vs. Xinhua Winshare Publishing |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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