Correlation Between United Microelectronics and Himax Technologies
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Himax Technologies 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 United Microelectronics and Himax Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Himax Technologies, you can compare the effects of market volatilities on United Microelectronics and Himax Technologies 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 United Microelectronics with a short position of Himax Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Himax Technologies.
Diversification Opportunities for United Microelectronics and Himax Technologies
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Himax is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Himax Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himax Technologies and United Microelectronics 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 United Microelectronics are associated (or correlated) with Himax Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Himax Technologies has no effect on the direction of United Microelectronics i.e., United Microelectronics and Himax Technologies go up and down completely randomly.
Pair Corralation between United Microelectronics and Himax Technologies
Considering the 90-day investment horizon United Microelectronics is expected to generate 0.98 times more return on investment than Himax Technologies. However, United Microelectronics is 1.02 times less risky than Himax Technologies. It trades about -0.17 of its potential returns per unit of risk. Himax Technologies is currently generating about -0.3 per unit of risk. If you would invest 742.00 in United Microelectronics on August 27, 2024 and sell it today you would lose (55.00) from holding United Microelectronics or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. Himax Technologies
Performance |
| Timeline |
| United Microelectronics |
| Himax Technologies |
United Microelectronics and Himax Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Himax Technologies
The main advantage of trading using opposite United Microelectronics and Himax Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Himax Technologies 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 Himax Technologies will offset losses from the drop in Himax Technologies' long position.The idea behind United Microelectronics and Himax Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Himax Technologies vs. ASE Industrial Holding | Himax Technologies vs. United Microelectronics | Himax Technologies vs. MaxLinear | Himax Technologies vs. SemiLEDS |
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 Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |