Correlation Between Union Materials and Mirai Semiconductors

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

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

Diversification Opportunities for Union Materials and Mirai Semiconductors

0.08

Correlation Coefficient

Union Materials  Mirai Semiconductors

Significant diversification

The 3 months correlation between Union and Mirai is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Union Materials Corp and Mirai Semiconductors Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirai Semiconductors and Union Materials 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 Union Materials Corp are associated (or correlated) with Mirai Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirai Semiconductors has no effect on the direction of Union Materials i.e., Union Materials and Mirai Semiconductors go up and down completely randomly.

Pair Corralation between Union Materials and Mirai Semiconductors

Assuming the 90 days trading horizon Union Materials Corp is expected to generate 0.92 times more return on investment than Mirai Semiconductors. However, Union Materials Corp is 1.08 times less risky than Mirai Semiconductors. It trades about 0.02 of its potential returns per unit of risk. Mirai Semiconductors Co is currently generating about -0.17 per unit of risk. If you would invest  219,500  in Union Materials Corp on September 26, 2024 and sell it today you would earn a total of  1,500  from holding Union Materials Corp or generate 0.68% return on investment over 90 days.

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

Union Materials Corp  vs.  Mirai Semiconductors Co

Union Materials Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Union Materials Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Union Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mirai Semiconductors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mirai Semiconductors Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Union Materials and Mirai Semiconductors

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

The idea behind Union Materials Corp and Mirai Semiconductors 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.