Correlation Between United Microelectronics and CTS
Can any of the company-specific risk be diversified away by investing in both United Microelectronics and CTS 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 United Microelectronics and CTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Microelectronics and CTS Corporation, you can compare the effects of market volatilities on United Microelectronics and CTS 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 United Microelectronics with a short position of CTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and CTS.
Diversification Opportunities for United Microelectronics and CTS
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and CTS is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation and United Microelectronics 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 United Microelectronics are associated (or correlated) with CTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Corporation has no effect on the direction of United Microelectronics i.e., United Microelectronics and CTS go up and down completely randomly.
Pair Corralation between United Microelectronics and CTS
Considering the 90-day investment horizon United Microelectronics is expected to under-perform the CTS. But the stock apears to be less risky and, when comparing its historical volatility, United Microelectronics is 1.26 times less risky than CTS. The stock trades about -0.16 of its potential returns per unit of risk. The CTS Corporation is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 5,429 in CTS Corporation on September 23, 2024 and sell it today you would lose (209.00) from holding CTS Corporation or give up 3.85% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
United Microelectronics vs. CTS Corp.
Performance |
Timeline |
United Microelectronics |
CTS Corporation |
United Microelectronics and CTS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Microelectronics and CTS
The main advantage of trading using opposite United Microelectronics and CTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Microelectronics position performs unexpectedly, CTS 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 CTS will offset losses from the drop in CTS's long position.United Microelectronics vs. Diodes Incorporated | United Microelectronics vs. Daqo New Energy | United Microelectronics vs. MagnaChip Semiconductor | United Microelectronics vs. Nano Labs |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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