Correlation Between UMC Electronics and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both UMC Electronics and Gladstone Investment 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 UMC Electronics and Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UMC Electronics Co and Gladstone Investment, you can compare the effects of market volatilities on UMC Electronics and Gladstone Investment 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 UMC Electronics with a short position of Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMC Electronics and Gladstone Investment.
Diversification Opportunities for UMC Electronics and Gladstone Investment
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UMC and Gladstone is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding UMC Electronics Co and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and UMC 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 UMC Electronics Co are associated (or correlated) with Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of UMC Electronics i.e., UMC Electronics and Gladstone Investment go up and down completely randomly.
Pair Corralation between UMC Electronics and Gladstone Investment
Assuming the 90 days horizon UMC Electronics Co is expected to under-perform the Gladstone Investment. In addition to that, UMC Electronics is 1.42 times more volatile than Gladstone Investment. It trades about -0.11 of its total potential returns per unit of risk. Gladstone Investment is currently generating about 0.08 per unit of volatility. If you would invest 1,193 in Gladstone Investment on August 30, 2024 and sell it today you would earn a total of 90.00 from holding Gladstone Investment or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
UMC Electronics Co vs. Gladstone Investment
Performance |
| Timeline |
| UMC Electronics |
| Gladstone Investment |
UMC Electronics and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMC Electronics and Gladstone Investment
The main advantage of trading using opposite UMC Electronics and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMC Electronics position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.| UMC Electronics vs. Singapore Reinsurance | UMC Electronics vs. MSAD INSURANCE | UMC Electronics vs. LIFENET INSURANCE CO | UMC Electronics vs. QBE Insurance Group |
| Gladstone Investment vs. HYDROFARM HLD GRP | Gladstone Investment vs. OURGAME INTHOLDL 00005 | Gladstone Investment vs. PENN NATL GAMING | Gladstone Investment vs. Titan Machinery |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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