Correlation Between Systex Corp and United Microelectronics

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

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

Diversification Opportunities for Systex Corp and United Microelectronics

0.04

Correlation Coefficient

Systex Corp  United Microelectronics

Significant diversification

The 3 months correlation between Systex and United is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Systex Corp and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Systex 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 Systex Corp 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 Systex Corp i.e., Systex Corp and United Microelectronics go up and down completely randomly.

Pair Corralation between Systex Corp and United Microelectronics

Assuming the 90 days trading horizon Systex Corp is expected to generate 9.68 times less return on investment than United Microelectronics. In addition to that, Systex Corp is 1.13 times more volatile than United Microelectronics. It trades about 0.01 of its total potential returns per unit of risk. United Microelectronics is currently generating about 0.06 per unit of volatility. 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

Systex Corp  vs.  United Microelectronics

Systex Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Systex Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Systex Corp 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 Systex Corp and United Microelectronics

The main advantage of trading using opposite Systex Corp and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Systex Corp 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 Systex Corp 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.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.