Correlation Between UMC Electronics and CSX
Can any of the company-specific risk be diversified away by investing in both UMC Electronics and CSX 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 CSX 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 CSX Corporation, you can compare the effects of market volatilities on UMC Electronics and CSX 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 CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMC Electronics and CSX.
Diversification Opportunities for UMC Electronics and CSX
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UMC and CSX is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding UMC Electronics Co and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation 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 CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of UMC Electronics i.e., UMC Electronics and CSX go up and down completely randomly.
Pair Corralation between UMC Electronics and CSX
Assuming the 90 days horizon UMC Electronics Co is expected to under-perform the CSX. But the stock apears to be less risky and, when comparing its historical volatility, UMC Electronics Co is 1.36 times less risky than CSX. The stock trades about -0.19 of its potential returns per unit of risk. The CSX Corporation is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,065 in CSX Corporation on August 30, 2024 and sell it today you would earn a total of 388.00 from holding CSX Corporation or generate 12.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UMC Electronics Co vs. CSX Corp.
Performance |
| Timeline |
| UMC Electronics |
| CSX Corporation |
UMC Electronics and CSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMC Electronics and CSX
The main advantage of trading using opposite UMC Electronics and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMC Electronics position performs unexpectedly, CSX 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 CSX will offset losses from the drop in CSX'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 |
| CSX vs. UMC Electronics Co | CSX vs. AOI Electronics Co | CSX vs. Gladstone Investment | CSX vs. AOYAMA TRADING |
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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