Correlation Between Wafer Works and Unimicron Technology

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

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

Diversification Opportunities for Wafer Works and Unimicron Technology

0.24

Correlation Coefficient

Wafer Works  Unimicron Technology

Modest diversification

The 3 months correlation between Wafer and Unimicron is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Wafer Works and Unimicron Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unimicron Technology Corp and Wafer Works 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 Wafer Works are associated (or correlated) with Unimicron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unimicron Technology Corp has no effect on the direction of Wafer Works i.e., Wafer Works and Unimicron Technology go up and down completely randomly.

Pair Corralation between Wafer Works and Unimicron Technology

Assuming the 90 days trading horizon Wafer Works is expected to generate 0.86 times more return on investment than Unimicron Technology. However, Wafer Works is 1.17 times less risky than Unimicron Technology. It trades about -0.12 of its potential returns per unit of risk. Unimicron Technology Corp is currently generating about -0.18 per unit of risk. If you would invest  2,915  in Wafer Works on December 24, 2024 and sell it today you would lose (435.00) from holding Wafer Works or give up 14.92% of portfolio value over 90 days.

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

Wafer Works  vs.  Unimicron Technology Corp

Wafer Works

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wafer Works 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.

Unimicron Technology Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unimicron Technology Corp 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 Wafer Works and Unimicron Technology

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

The idea behind Wafer Works and Unimicron Technology Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.