Correlation Between Semtech and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Semtech 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 Semtech and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semtech and United Microelectronics, you can compare the effects of market volatilities on Semtech 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 Semtech with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and United Microelectronics.
Diversification Opportunities for Semtech and United Microelectronics
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Semtech and United is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Semtech 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 Semtech 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 Semtech i.e., Semtech and United Microelectronics go up and down completely randomly.
Pair Corralation between Semtech and United Microelectronics
Given the investment horizon of 90 days Semtech is expected to generate 1.85 times more return on investment than United Microelectronics. However, Semtech is 1.85 times more volatile than United Microelectronics. It trades about 0.16 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.26 per unit of risk. If you would invest 4,480 in Semtech on August 24, 2024 and sell it today you would earn a total of 588.00 from holding Semtech or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Semtech vs. United Microelectronics
Performance |
| Timeline |
| Semtech |
| United Microelectronics |
Semtech and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semtech and United Microelectronics
The main advantage of trading using opposite Semtech and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech 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.| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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