Correlation Between United Microelectronics and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Olympic Steel 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 Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Olympic Steel, you can compare the effects of market volatilities on United Microelectronics and Olympic Steel 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 Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Olympic Steel.
Diversification Opportunities for United Microelectronics and Olympic Steel
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Olympic is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel 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 Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of United Microelectronics i.e., United Microelectronics and Olympic Steel go up and down completely randomly.
Pair Corralation between United Microelectronics and Olympic Steel
Considering the 90-day investment horizon United Microelectronics is expected to under-perform the Olympic Steel. In addition to that, United Microelectronics is 1.14 times more volatile than Olympic Steel. It trades about -0.26 of its total potential returns per unit of risk. Olympic Steel is currently generating about 0.2 per unit of volatility. If you would invest 3,198 in Olympic Steel on November 3, 2024 and sell it today you would earn a total of 249.00 from holding Olympic Steel or generate 7.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Microelectronics vs. Olympic Steel
Performance |
| Timeline |
| United Microelectronics |
| Olympic Steel |
United Microelectronics and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Microelectronics and Olympic Steel
The main advantage of trading using opposite United Microelectronics and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Olympic Steel 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 Olympic Steel will offset losses from the drop in Olympic Steel's long position.| United Microelectronics vs. Silicon Motion Technology | United Microelectronics vs. ASE Industrial Holding | United Microelectronics vs. ChipMOS Technologies | United Microelectronics vs. SemiLEDS |
| Olympic Steel vs. Outokumpu Oyj ADR | Olympic Steel vs. Usinas Siderurgicas de | Olympic Steel vs. POSCO Holdings | Olympic Steel vs. Steel Dynamics |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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