Correlation Between United Microelectronics and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Silicon Motion 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 Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Silicon Motion Technology, you can compare the effects of market volatilities on United Microelectronics and Silicon Motion 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 Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Silicon Motion.
Diversification Opportunities for United Microelectronics and Silicon Motion
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Silicon is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Silicon Motion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Motion Technology 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 Silicon Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Motion Technology has no effect on the direction of United Microelectronics i.e., United Microelectronics and Silicon Motion go up and down completely randomly.
Pair Corralation between United Microelectronics and Silicon Motion
Considering the 90-day investment horizon United Microelectronics is expected to generate 0.87 times more return on investment than Silicon Motion. However, United Microelectronics is 1.15 times less risky than Silicon Motion. It trades about -0.07 of its potential returns per unit of risk. Silicon Motion Technology is currently generating about -0.09 per unit of risk. If you would invest 840.00 in United Microelectronics on August 24, 2024 and sell it today you would lose (163.00) from holding United Microelectronics or give up 19.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. Silicon Motion Technology
Performance |
| Timeline |
| United Microelectronics |
| Silicon Motion Technology |
United Microelectronics and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Silicon Motion
The main advantage of trading using opposite United Microelectronics and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Silicon Motion 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 Silicon Motion will offset losses from the drop in Silicon Motion's long position.| United Microelectronics vs. Silicon Motion Technology | United Microelectronics vs. ASE Industrial Holding | United Microelectronics vs. ChipMOS Technologies | United Microelectronics vs. SemiLEDS |
| Silicon Motion vs. ASE Industrial Holding | Silicon Motion vs. United Microelectronics | Silicon Motion vs. ChipMOS Technologies | Silicon Motion 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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