Correlation Between UMC Electronics and Kyocera

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

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

Diversification Opportunities for UMC Electronics and Kyocera

0.39

Correlation Coefficient

UMC Electronics  Kyocera

Weak diversification

The 3 months correlation between UMC and Kyocera is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding UMC Electronics Co and Kyocera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyocera and UMC Electronics 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 UMC Electronics Co are associated (or correlated) with Kyocera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyocera has no effect on the direction of UMC Electronics i.e., UMC Electronics and Kyocera go up and down completely randomly.

Pair Corralation between UMC Electronics and Kyocera

Assuming the 90 days horizon UMC Electronics is expected to generate 2.46 times less return on investment than Kyocera. In addition to that, UMC Electronics is 1.64 times more volatile than Kyocera. It trades about 0.03 of its total potential returns per unit of risk. Kyocera is currently generating about 0.13 per unit of volatility. If you would invest  914.00  in Kyocera on December 29, 2024 and sell it today you would earn a total of  135.00  from holding Kyocera or generate 14.77% return on investment over 90 days.

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

UMC Electronics Co  vs.  Kyocera

UMC Electronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UMC Electronics Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, UMC Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Kyocera

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kyocera are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Kyocera reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UMC Electronics and Kyocera

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

The idea behind UMC Electronics Co and Kyocera 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.