Correlation Between UMC Electronics and REINET INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both UMC Electronics and REINET INVESTMENTS 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 REINET INVESTMENTS 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 REINET INVESTMENTS SCA, you can compare the effects of market volatilities on UMC Electronics and REINET INVESTMENTS 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 REINET INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMC Electronics and REINET INVESTMENTS.
Diversification Opportunities for UMC Electronics and REINET INVESTMENTS
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UMC and REINET is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding UMC Electronics Co and REINET INVESTMENTS SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REINET INVESTMENTS SCA 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 REINET INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REINET INVESTMENTS SCA has no effect on the direction of UMC Electronics i.e., UMC Electronics and REINET INVESTMENTS go up and down completely randomly.
Pair Corralation between UMC Electronics and REINET INVESTMENTS
Assuming the 90 days horizon UMC Electronics Co is expected to under-perform the REINET INVESTMENTS. In addition to that, UMC Electronics is 1.62 times more volatile than REINET INVESTMENTS SCA. It trades about -0.15 of its total potential returns per unit of risk. REINET INVESTMENTS SCA is currently generating about -0.11 per unit of volatility. If you would invest 2,500 in REINET INVESTMENTS SCA on September 2, 2024 and sell it today you would lose (80.00) from holding REINET INVESTMENTS SCA or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UMC Electronics Co vs. REINET INVESTMENTS SCA
Performance |
| Timeline |
| UMC Electronics |
| REINET INVESTMENTS SCA |
UMC Electronics and REINET INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMC Electronics and REINET INVESTMENTS
The main advantage of trading using opposite UMC Electronics and REINET INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMC Electronics position performs unexpectedly, REINET INVESTMENTS 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 REINET INVESTMENTS will offset losses from the drop in REINET INVESTMENTS'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 |
| REINET INVESTMENTS vs. Richardson Electronics | REINET INVESTMENTS vs. United Microelectronics Corp | REINET INVESTMENTS vs. MARKET VECTR RETAIL | REINET INVESTMENTS vs. AGF Management Limited |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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