Correlation Between UMC Electronics and China Shengmu
Can any of the company-specific risk be diversified away by investing in both UMC Electronics and China Shengmu 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 China Shengmu 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 China Shengmu Organic, you can compare the effects of market volatilities on UMC Electronics and China Shengmu 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 China Shengmu. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMC Electronics and China Shengmu.
Diversification Opportunities for UMC Electronics and China Shengmu
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between UMC and China is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding UMC Electronics Co and China Shengmu Organic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Shengmu Organic 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 China Shengmu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Shengmu Organic has no effect on the direction of UMC Electronics i.e., UMC Electronics and China Shengmu go up and down completely randomly.
Pair Corralation between UMC Electronics and China Shengmu
Assuming the 90 days horizon UMC Electronics Co is expected to under-perform the China Shengmu. In addition to that, UMC Electronics is 1.52 times more volatile than China Shengmu Organic. It trades about -0.18 of its total potential returns per unit of risk. China Shengmu Organic is currently generating about -0.05 per unit of volatility. If you would invest 2.05 in China Shengmu Organic on September 12, 2024 and sell it today you would lose (0.05) from holding China Shengmu Organic or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
UMC Electronics Co vs. China Shengmu Organic
Performance |
| Timeline |
| UMC Electronics |
| China Shengmu Organic |
UMC Electronics and China Shengmu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMC Electronics and China Shengmu
The main advantage of trading using opposite UMC Electronics and China Shengmu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMC Electronics position performs unexpectedly, China Shengmu 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 China Shengmu will offset losses from the drop in China Shengmu's long position.| UMC Electronics vs. Sunny Optical Technology | UMC Electronics vs. Hubbell Incorporated | UMC Electronics vs. TDK Corporation | UMC Electronics vs. Superior Plus Corp |
| China Shengmu vs. SINGAPORE AIRLINES | China Shengmu vs. CN MODERN DAIRY | China Shengmu vs. Lifeway Foods | China Shengmu vs. National Beverage Corp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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