Correlation Between Green World and Universal Microelectronics

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

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

Diversification Opportunities for Green World and Universal Microelectronics

0.52

Correlation Coefficient

Green World  Universal Microelectronics

Very weak diversification

The 3 months correlation between Green and Universal is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Green World Fintech and Universal Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Microelectronics and Green World 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 Green World Fintech 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 Green World i.e., Green World and Universal Microelectronics go up and down completely randomly.

Pair Corralation between Green World and Universal Microelectronics

Assuming the 90 days trading horizon Green World Fintech is expected to generate 17.63 times more return on investment than Universal Microelectronics. However, Green World is 17.63 times more volatile than Universal Microelectronics Co. It trades about 0.05 of its potential returns per unit of risk. Universal Microelectronics Co is currently generating about 0.0 per unit of risk. If you would invest  2,472  in Green World Fintech on October 13, 2024 and sell it today you would earn a total of  3,578  from holding Green World Fintech or generate 144.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Green World Fintech  vs.  Universal Microelectronics Co

Green World Fintech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Green World Fintech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Green World showed solid returns over the last few months and may actually be approaching a breakup point.

Universal Microelectronics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Microelectronics Co are ranked lower than 4 (%) 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 Green World and Universal Microelectronics

The main advantage of trading using opposite Green World and Universal Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green World 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 Green World Fintech 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.