Correlation Between UMC Electronics and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both UMC Electronics and Chesapeake Utilities 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 Chesapeake Utilities 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 Chesapeake Utilities, you can compare the effects of market volatilities on UMC Electronics and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMC Electronics and Chesapeake Utilities.
Diversification Opportunities for UMC Electronics and Chesapeake Utilities
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UMC and Chesapeake is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding UMC Electronics Co and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of UMC Electronics i.e., UMC Electronics and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between UMC Electronics and Chesapeake Utilities
Assuming the 90 days horizon UMC Electronics Co is expected to under-perform the Chesapeake Utilities. In addition to that, UMC Electronics is 1.98 times more volatile than Chesapeake Utilities. It trades about -0.01 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.08 per unit of volatility. If you would invest 10,646 in Chesapeake Utilities on December 1, 2024 and sell it today you would earn a total of 954.00 from holding Chesapeake Utilities or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UMC Electronics Co vs. Chesapeake Utilities
Performance |
| Timeline |
| UMC Electronics |
| Chesapeake Utilities |
UMC Electronics and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMC Electronics and Chesapeake Utilities
The main advantage of trading using opposite UMC Electronics and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMC Electronics position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| UMC Electronics vs. CORNISH METALS INC | UMC Electronics vs. Fortescue Metals Group | UMC Electronics vs. Inspire Medical Systems | UMC Electronics vs. China Medical System |
| Chesapeake Utilities vs. Platinum Investment Management | Chesapeake Utilities vs. Jacquet Metal Service | Chesapeake Utilities vs. Eskay Mining Corp | Chesapeake Utilities vs. CEOTRONICS |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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