Correlation Between United Microelectronics and Everspin Technologies

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

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

Diversification Opportunities for United Microelectronics and Everspin Technologies

-0.5

Correlation Coefficient

United Microelectronics  Everspin Technologies

Very good diversification

The 3 months correlation between United and Everspin is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies 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 Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of United Microelectronics i.e., United Microelectronics and Everspin Technologies go up and down completely randomly.

Pair Corralation between United Microelectronics and Everspin Technologies

Considering the 90-day investment horizon United Microelectronics is expected to generate 0.76 times more return on investment than Everspin Technologies. However, United Microelectronics is 1.31 times less risky than Everspin Technologies. It trades about -0.02 of its potential returns per unit of risk. Everspin Technologies is currently generating about -0.05 per unit of risk. If you would invest  778.00  in United Microelectronics on September 20, 2024 and sell it today you would lose (120.00) from holding United Microelectronics or give up 15.42% of portfolio value over 90 days.

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

United Microelectronics  vs.  Everspin Technologies

United Microelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Microelectronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Everspin Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everspin Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Everspin Technologies is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with United Microelectronics and Everspin Technologies

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

The idea behind United Microelectronics and Everspin Technologies 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.