Correlation Between United Microelectronics and Eltek
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and Eltek 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 United Microelectronics and Eltek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and Eltek, you can compare the effects of market volatilities on United Microelectronics and Eltek 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 United Microelectronics with a short position of Eltek. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Eltek.
Diversification Opportunities for United Microelectronics and Eltek
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Eltek is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek and United Microelectronics 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 United Microelectronics are associated (or correlated) with Eltek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eltek has no effect on the direction of United Microelectronics i.e., United Microelectronics and Eltek go up and down completely randomly.
Pair Corralation between United Microelectronics and Eltek
Considering the 90-day investment horizon United Microelectronics is expected to under-perform the Eltek. But the stock apears to be less risky and, when comparing its historical volatility, United Microelectronics is 1.45 times less risky than Eltek. The stock trades about -0.25 of its potential returns per unit of risk. The Eltek is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,080 in Eltek on September 14, 2024 and sell it today you would earn a total of 22.50 from holding Eltek or generate 2.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United Microelectronics vs. Eltek
Performance |
Timeline |
United Microelectronics |
Eltek |
United Microelectronics and Eltek Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Microelectronics and Eltek
The main advantage of trading using opposite United Microelectronics and Eltek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, Eltek 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 Eltek will offset losses from the drop in Eltek's long position.United Microelectronics vs. Silicon Motion Technology | United Microelectronics vs. ASE Industrial Holding | United Microelectronics vs. ChipMOS Technologies | United Microelectronics vs. SemiLEDS |
Check out your portfolio center.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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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