Correlation Between UMC Electronics and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both UMC Electronics and Electronic Arts 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 Electronic Arts 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 Electronic Arts, you can compare the effects of market volatilities on UMC Electronics and Electronic Arts 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 Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMC Electronics and Electronic Arts.
Diversification Opportunities for UMC Electronics and Electronic Arts
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between UMC and Electronic is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding UMC Electronics Co and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts 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 Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of UMC Electronics i.e., UMC Electronics and Electronic Arts go up and down completely randomly.
Pair Corralation between UMC Electronics and Electronic Arts
Assuming the 90 days horizon UMC Electronics Co is expected to generate 1.34 times more return on investment than Electronic Arts. However, UMC Electronics is 1.34 times more volatile than Electronic Arts. It trades about -0.03 of its potential returns per unit of risk. Electronic Arts is currently generating about -0.04 per unit of risk. If you would invest 208.00 in UMC Electronics Co on November 7, 2024 and sell it today you would lose (28.00) from holding UMC Electronics Co or give up 13.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
UMC Electronics Co vs. Electronic Arts
Performance |
| Timeline |
| UMC Electronics |
| Electronic Arts |
UMC Electronics and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMC Electronics and Electronic Arts
The main advantage of trading using opposite UMC Electronics and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMC Electronics position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' 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 |
| Electronic Arts vs. URBAN OUTFITTERS | Electronic Arts vs. VIVA WINE GROUP | Electronic Arts vs. G III APPAREL GROUP | Electronic Arts vs. IMPERIAL TOBACCO |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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