Correlation Between Unimicron Technology and LARGAN Precision

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

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

Diversification Opportunities for Unimicron Technology and LARGAN Precision

-0.76

Correlation Coefficient

Unimicron Technology  LARGAN Precision

Pay attention - limited upside

The 3 months correlation between Unimicron and LARGAN is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Unimicron Technology Corp and LARGAN Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LARGAN Precision and Unimicron Technology 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 Unimicron Technology Corp are associated (or correlated) with LARGAN Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LARGAN Precision has no effect on the direction of Unimicron Technology i.e., Unimicron Technology and LARGAN Precision go up and down completely randomly.

Pair Corralation between Unimicron Technology and LARGAN Precision

Assuming the 90 days trading horizon Unimicron Technology Corp is expected to generate 1.08 times more return on investment than LARGAN Precision. However, Unimicron Technology is 1.08 times more volatile than LARGAN Precision Co. It trades about 0.01 of its potential returns per unit of risk. LARGAN Precision Co is currently generating about -0.05 per unit of risk. If you would invest  14,750  in Unimicron Technology Corp on September 13, 2024 and sell it today you would earn a total of  50.00  from holding Unimicron Technology Corp or generate 0.34% return on investment over 90 days.

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

Unimicron Technology Corp  vs.  LARGAN Precision Co

Unimicron Technology Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Unimicron Technology Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Unimicron Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

LARGAN Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LARGAN Precision Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Unimicron Technology and LARGAN Precision

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

The idea behind Unimicron Technology Corp and LARGAN Precision 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.