Correlation Between Genius Electronic and Unimicron Technology

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

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

Diversification Opportunities for Genius Electronic and Unimicron Technology

-0.65

Correlation Coefficient

Genius Electronic  Unimicron Technology

Excellent diversification

The 3 months correlation between Genius and Unimicron is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Genius Electronic Optical and Unimicron Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unimicron Technology Corp and Genius Electronic 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 Genius Electronic Optical are associated (or correlated) with Unimicron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unimicron Technology Corp has no effect on the direction of Genius Electronic i.e., Genius Electronic and Unimicron Technology go up and down completely randomly.

Pair Corralation between Genius Electronic and Unimicron Technology

Assuming the 90 days trading horizon Genius Electronic Optical is expected to under-perform the Unimicron Technology. But the stock apears to be less risky and, when comparing its historical volatility, Genius Electronic Optical is 1.41 times less risky than Unimicron Technology. The stock trades about -0.06 of its potential returns per unit of risk. The Unimicron Technology Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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

Genius Electronic Optical  vs.  Unimicron Technology Corp

Genius Electronic Optical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genius Electronic Optical 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.

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.

Pair Trading with Genius Electronic and Unimicron Technology

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

The idea behind Genius Electronic Optical and Unimicron Technology Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.