Correlation Between UMC Electronics and BW OFFSHORE
Can any of the company-specific risk be diversified away by investing in both UMC Electronics and BW OFFSHORE 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 BW OFFSHORE 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 BW OFFSHORE LTD, you can compare the effects of market volatilities on UMC Electronics and BW OFFSHORE 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 BW OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMC Electronics and BW OFFSHORE.
Diversification Opportunities for UMC Electronics and BW OFFSHORE
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between UMC and XY81 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding UMC Electronics Co and BW OFFSHORE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW OFFSHORE LTD 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 BW OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW OFFSHORE LTD has no effect on the direction of UMC Electronics i.e., UMC Electronics and BW OFFSHORE go up and down completely randomly.
Pair Corralation between UMC Electronics and BW OFFSHORE
Assuming the 90 days horizon UMC Electronics Co is expected to generate 0.88 times more return on investment than BW OFFSHORE. However, UMC Electronics Co is 1.14 times less risky than BW OFFSHORE. It trades about 0.0 of its potential returns per unit of risk. BW OFFSHORE LTD is currently generating about -0.09 per unit of risk. If you would invest 181.00 in UMC Electronics Co on November 7, 2024 and sell it today you would lose (1.00) from holding UMC Electronics Co or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UMC Electronics Co vs. BW OFFSHORE LTD
Performance |
| Timeline |
| UMC Electronics |
| BW OFFSHORE LTD |
UMC Electronics and BW OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMC Electronics and BW OFFSHORE
The main advantage of trading using opposite UMC Electronics and BW OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMC Electronics position performs unexpectedly, BW OFFSHORE 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 BW OFFSHORE will offset losses from the drop in BW OFFSHORE's 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 |
| BW OFFSHORE vs. East Africa Metals | BW OFFSHORE vs. Sunny Optical Technology | BW OFFSHORE vs. MAGNUM MINING EXP | BW OFFSHORE vs. Zijin Mining 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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