Correlation Between UMC Electronics and Orange SA
Can any of the company-specific risk be diversified away by investing in both UMC Electronics and Orange SA 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 Orange SA 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 Orange SA, you can compare the effects of market volatilities on UMC Electronics and Orange SA 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 Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMC Electronics and Orange SA.
Diversification Opportunities for UMC Electronics and Orange SA
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UMC and Orange is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding UMC Electronics Co and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA 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 Orange SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange SA has no effect on the direction of UMC Electronics i.e., UMC Electronics and Orange SA go up and down completely randomly.
Pair Corralation between UMC Electronics and Orange SA
Assuming the 90 days horizon UMC Electronics Co is expected to under-perform the Orange SA. In addition to that, UMC Electronics is 2.42 times more volatile than Orange SA. It trades about -0.15 of its total potential returns per unit of risk. Orange SA is currently generating about 0.03 per unit of volatility. If you would invest 1,006 in Orange SA on August 28, 2024 and sell it today you would earn a total of 5.00 from holding Orange SA or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
UMC Electronics Co vs. Orange SA
Performance |
| Timeline |
| UMC Electronics |
| Orange SA |
UMC Electronics and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMC Electronics and Orange SA
The main advantage of trading using opposite UMC Electronics and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMC Electronics position performs unexpectedly, Orange SA 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 Orange SA will offset losses from the drop in Orange SA's long position.| UMC Electronics vs. Harmony Gold Mining | UMC Electronics vs. Calibre Mining Corp | UMC Electronics vs. MACOM Technology Solutions | UMC Electronics vs. Check Point Software |
| Orange SA vs. INTER CARS SA | Orange SA vs. Burlington Stores | Orange SA vs. Vastned Retail NV | Orange SA vs. RETAIL FOOD GROUP |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |