Correlation Between CTCI Corp and Universal Microelectronics

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

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

Diversification Opportunities for CTCI Corp and Universal Microelectronics

-0.86

Correlation Coefficient

CTCI Corp  Universal Microelectronics

Pay attention - limited upside

The 3 months correlation between CTCI and Universal is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding CTCI Corp and Universal Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Microelectronics and CTCI Corp 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 CTCI Corp are associated (or correlated) with Universal Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Microelectronics has no effect on the direction of CTCI Corp i.e., CTCI Corp and Universal Microelectronics go up and down completely randomly.

Pair Corralation between CTCI Corp and Universal Microelectronics

Assuming the 90 days trading horizon CTCI Corp is expected to under-perform the Universal Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, CTCI Corp is 4.31 times less risky than Universal Microelectronics. The stock trades about -0.37 of its potential returns per unit of risk. The Universal Microelectronics Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,980  in Universal Microelectronics Co on September 12, 2024 and sell it today you would earn a total of  605.00  from holding Universal Microelectronics Co or generate 30.56% return on investment over 90 days.

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

CTCI Corp  vs.  Universal Microelectronics Co

CTCI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTCI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Universal Microelectronics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Microelectronics Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Universal Microelectronics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CTCI Corp and Universal Microelectronics

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

The idea behind CTCI Corp and Universal Microelectronics 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.