Correlation Between Ingentec and Universal Microelectronics

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

By analyzing existing cross correlation between Ingentec and Universal Microelectronics Co, you can compare the effects of market volatilities on Ingentec and Universal Microelectronics 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 Ingentec with a short position of Universal Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingentec and Universal Microelectronics.

Diversification Opportunities for Ingentec and Universal Microelectronics

-0.6

Correlation Coefficient

Ingentec  Universal Microelectronics

Excellent diversification

The 3 months correlation between Ingentec and Universal is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ingentec and Universal Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Microelectronics and Ingentec 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 Ingentec are associated (or correlated) with Universal Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Microelectronics has no effect on the direction of Ingentec i.e., Ingentec and Universal Microelectronics go up and down completely randomly.

Pair Corralation between Ingentec and Universal Microelectronics

Assuming the 90 days trading horizon Ingentec is expected to generate 0.58 times more return on investment than Universal Microelectronics. However, Ingentec is 1.74 times less risky than Universal Microelectronics. It trades about -0.34 of its potential returns per unit of risk. Universal Microelectronics Co is currently generating about -0.24 per unit of risk. If you would invest  20,250  in Ingentec on September 25, 2024 and sell it today you would lose (2,500) from holding Ingentec or give up 12.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Ingentec  vs.  Universal Microelectronics Co

Ingentec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ingentec 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Universal Microelectronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Microelectronics Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Universal Microelectronics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ingentec and Universal Microelectronics

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

The idea behind Ingentec and Universal Microelectronics Co 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 Global Correlations module to find global opportunities by holding instruments from different markets.