Correlation Between ITEQ Corp and Unimicron Technology

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

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

Diversification Opportunities for ITEQ Corp and Unimicron Technology

0.62

Correlation Coefficient

ITEQ Corp  Unimicron Technology

Poor diversification

The 3 months correlation between ITEQ and Unimicron is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ITEQ Corp 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 ITEQ Corp 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 ITEQ Corp 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 ITEQ Corp i.e., ITEQ Corp and Unimicron Technology go up and down completely randomly.

Pair Corralation between ITEQ Corp and Unimicron Technology

Assuming the 90 days trading horizon ITEQ Corp is expected to generate 1.05 times more return on investment than Unimicron Technology. However, ITEQ Corp is 1.05 times more volatile than Unimicron Technology Corp. It trades about 0.02 of its potential returns per unit of risk. Unimicron Technology Corp is currently generating about -0.36 per unit of risk. If you would invest  7,740  in ITEQ Corp on September 16, 2024 and sell it today you would earn a total of  20.00  from holding ITEQ Corp or generate 0.26% return on investment over 90 days.

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

ITEQ Corp  vs.  Unimicron Technology Corp

ITEQ Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ITEQ Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, ITEQ Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Unimicron Technology Corp

Risk-Adjusted Performance

0 of 100

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 fairly stable basic indicators, Unimicron Technology 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 ITEQ Corp and Unimicron Technology

The main advantage of trading using opposite ITEQ Corp and Unimicron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITEQ Corp 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 ITEQ Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.