Correlation Between United Microelectronics and Jentech Precision

Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Jentech Precision 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 Jentech Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Microelectronics and Jentech Precision Industrial, you can compare the effects of market volatilities on United Microelectronics and Jentech Precision 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 Jentech Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Jentech Precision.

Diversification Opportunities for United Microelectronics and Jentech Precision

-0.05

Correlation Coefficient

United Microelectronics  Jentech Precision

Good diversification

The 3 months correlation between United and Jentech is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Jentech Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jentech Precision 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 Jentech Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jentech Precision has no effect on the direction of United Microelectronics i.e., United Microelectronics and Jentech Precision go up and down completely randomly.

Pair Corralation between United Microelectronics and Jentech Precision

Assuming the 90 days trading horizon United Microelectronics is expected to generate 0.42 times more return on investment than Jentech Precision. However, United Microelectronics is 2.39 times less risky than Jentech Precision. It trades about 0.03 of its potential returns per unit of risk. Jentech Precision Industrial is currently generating about -0.1 per unit of risk. If you would invest  4,400  in United Microelectronics on December 24, 2024 and sell it today you would earn a total of  100.00  from holding United Microelectronics or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

United Microelectronics  vs.  Jentech Precision Industrial

United Microelectronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Microelectronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, United Microelectronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Jentech Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jentech Precision Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with United Microelectronics and Jentech Precision

The main advantage of trading using opposite United Microelectronics and Jentech Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Jentech Precision 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 Jentech Precision will offset losses from the drop in Jentech Precision's long position.

The idea behind United Microelectronics and Jentech Precision Industrial 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.

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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.