Correlation Between Sinher Technology and United Microelectronics

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

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

Diversification Opportunities for Sinher Technology and United Microelectronics

0.1

Correlation Coefficient

Sinher Technology  United Microelectronics

Average diversification

The 3 months correlation between Sinher and United is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sinher Technology and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Sinher Technology 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 Sinher Technology are associated (or correlated) with United Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Microelectronics has no effect on the direction of Sinher Technology i.e., Sinher Technology and United Microelectronics go up and down completely randomly.

Pair Corralation between Sinher Technology and United Microelectronics

Assuming the 90 days trading horizon Sinher Technology is expected to under-perform the United Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Sinher Technology is 2.04 times less risky than United Microelectronics. The stock trades about -0.09 of its potential returns per unit of risk. The United Microelectronics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,290  in United Microelectronics on December 23, 2024 and sell it today you would earn a total of  210.00  from holding United Microelectronics or generate 4.9% return on investment over 90 days.

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

Sinher Technology  vs.  United Microelectronics

Sinher Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sinher Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sinher Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

United Microelectronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United Microelectronics are ranked lower than 4 (%) 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.

Pair Trading with Sinher Technology and United Microelectronics

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

The idea behind Sinher Technology and United Microelectronics 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.