Correlation Between UMC Electronics and Japan Post
Can any of the company-specific risk be diversified away by investing in both UMC Electronics and Japan Post 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 Japan Post 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 Japan Post Insurance, you can compare the effects of market volatilities on UMC Electronics and Japan Post 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 Japan Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMC Electronics and Japan Post.
Diversification Opportunities for UMC Electronics and Japan Post
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UMC and Japan is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding UMC Electronics Co and Japan Post Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Post Insurance 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 Japan Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Post Insurance has no effect on the direction of UMC Electronics i.e., UMC Electronics and Japan Post go up and down completely randomly.
Pair Corralation between UMC Electronics and Japan Post
Assuming the 90 days horizon UMC Electronics Co is expected to under-perform the Japan Post. In addition to that, UMC Electronics is 1.83 times more volatile than Japan Post Insurance. It trades about -0.02 of its total potential returns per unit of risk. Japan Post Insurance is currently generating about 0.18 per unit of volatility. If you would invest 1,780 in Japan Post Insurance on November 6, 2024 and sell it today you would earn a total of 70.00 from holding Japan Post Insurance or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
UMC Electronics Co vs. Japan Post Insurance
Performance |
| Timeline |
| UMC Electronics |
| Japan Post Insurance |
UMC Electronics and Japan Post Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMC Electronics and Japan Post
The main advantage of trading using opposite UMC Electronics and Japan Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMC Electronics position performs unexpectedly, Japan Post 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 Japan Post will offset losses from the drop in Japan Post's long position.| UMC Electronics vs. ARDAGH METAL PACDL 0001 | UMC Electronics vs. BlueScope Steel Limited | UMC Electronics vs. MAANSHAN IRON H | UMC Electronics vs. ANGANG STEEL H |
| Japan Post vs. Texas Roadhouse | Japan Post vs. Nishi Nippon Railroad Co | Japan Post vs. Planet Fitness | Japan Post vs. PURETECH HEALTH PLC |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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