Correlation Between UMC Electronics and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both UMC Electronics and BJs Restaurants 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 BJs Restaurants 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 BJs Restaurants, you can compare the effects of market volatilities on UMC Electronics and BJs Restaurants 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 BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMC Electronics and BJs Restaurants.
Diversification Opportunities for UMC Electronics and BJs Restaurants
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between UMC and BJs is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding UMC Electronics Co and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of UMC Electronics i.e., UMC Electronics and BJs Restaurants go up and down completely randomly.
Pair Corralation between UMC Electronics and BJs Restaurants
Assuming the 90 days horizon UMC Electronics Co is expected to under-perform the BJs Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, UMC Electronics Co is 1.03 times less risky than BJs Restaurants. The stock trades about 0.0 of its potential returns per unit of risk. The BJs Restaurants is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,960 in BJs Restaurants on September 4, 2024 and sell it today you would earn a total of 600.00 from holding BJs Restaurants or generate 20.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UMC Electronics Co vs. BJs Restaurants
Performance |
| Timeline |
| UMC Electronics |
| BJs Restaurants |
UMC Electronics and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMC Electronics and BJs Restaurants
The main advantage of trading using opposite UMC Electronics and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMC Electronics position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| UMC Electronics vs. Hon Hai Precision | UMC Electronics vs. Samsung SDI Co | UMC Electronics vs. Murata Manufacturing Co | UMC Electronics vs. Mitsubishi Electric |
| BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants vs. Apple Inc | BJs Restaurants 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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