Correlation Between UMC Electronics and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both UMC Electronics and Goodyear Tire 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 Goodyear Tire 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 Goodyear Tire Rubber, you can compare the effects of market volatilities on UMC Electronics and Goodyear Tire 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 Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMC Electronics and Goodyear Tire.
Diversification Opportunities for UMC Electronics and Goodyear Tire
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between UMC and Goodyear is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding UMC Electronics Co and Goodyear Tire Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Tire Rubber 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 Goodyear Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodyear Tire Rubber has no effect on the direction of UMC Electronics i.e., UMC Electronics and Goodyear Tire go up and down completely randomly.
Pair Corralation between UMC Electronics and Goodyear Tire
Assuming the 90 days horizon UMC Electronics Co is expected to under-perform the Goodyear Tire. But the stock apears to be less risky and, when comparing its historical volatility, UMC Electronics Co is 1.09 times less risky than Goodyear Tire. The stock trades about -0.03 of its potential returns per unit of risk. The Goodyear Tire Rubber is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,017 in Goodyear Tire Rubber on September 2, 2024 and sell it today you would lose (20.00) from holding Goodyear Tire Rubber or give up 1.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UMC Electronics Co vs. Goodyear Tire Rubber
Performance |
| Timeline |
| UMC Electronics |
| Goodyear Tire Rubber |
UMC Electronics and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMC Electronics and Goodyear Tire
The main advantage of trading using opposite UMC Electronics and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMC Electronics position performs unexpectedly, Goodyear Tire 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 Goodyear Tire will offset losses from the drop in Goodyear Tire's long position.| UMC Electronics vs. CHINA TONTINE WINES | UMC Electronics vs. Silicon Motion Technology | UMC Electronics vs. China BlueChemical | UMC Electronics vs. Sanyo Chemical Industries |
| Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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