Correlation Between Ingentec and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Ingentec and United Microelectronics 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 Ingentec and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingentec and United Microelectronics, you can compare the effects of market volatilities on Ingentec and United Microelectronics 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 Ingentec with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingentec and United Microelectronics.
Diversification Opportunities for Ingentec and United Microelectronics
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ingentec and United is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ingentec and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Ingentec 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 Ingentec are associated (or correlated) with United Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Microelectronics has no effect on the direction of Ingentec i.e., Ingentec and United Microelectronics go up and down completely randomly.
Pair Corralation between Ingentec and United Microelectronics
Assuming the 90 days trading horizon Ingentec is expected to generate 1.74 times more return on investment than United Microelectronics. However, Ingentec is 1.74 times more volatile than United Microelectronics. It trades about 0.04 of its potential returns per unit of risk. United Microelectronics is currently generating about 0.02 per unit of risk. If you would invest 12,929 in Ingentec on September 26, 2024 and sell it today you would earn a total of 4,821 from holding Ingentec or generate 37.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 99.79% |
Values | Daily Returns |
Ingentec vs. United Microelectronics
Performance |
Timeline |
Ingentec |
United Microelectronics |
Ingentec and United Microelectronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ingentec and United Microelectronics
The main advantage of trading using opposite Ingentec and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingentec position performs unexpectedly, United Microelectronics 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 United Microelectronics will offset losses from the drop in United Microelectronics' long position.Ingentec vs. Nan Ya Plastics | Ingentec vs. China Petrochemical Development | Ingentec vs. Eternal Materials Co | Ingentec vs. TSRC Corp |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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