Correlation Between United Microelectronics and Silergy Corp

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

By analyzing existing cross correlation between United Microelectronics and Silergy Corp, you can compare the effects of market volatilities on United Microelectronics and Silergy Corp 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 Silergy Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Microelectronics and Silergy Corp.

Diversification Opportunities for United Microelectronics and Silergy Corp

0.61

Correlation Coefficient

United Microelectronics  Silergy Corp

Poor diversification

The 3 months correlation between United and Silergy is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Microelectronics and Silergy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silergy Corp 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 Silergy Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silergy Corp has no effect on the direction of United Microelectronics i.e., United Microelectronics and Silergy Corp go up and down completely randomly.

Pair Corralation between United Microelectronics and Silergy Corp

Assuming the 90 days trading horizon United Microelectronics is expected to generate 0.38 times more return on investment than Silergy Corp. However, United Microelectronics is 2.61 times less risky than Silergy Corp. It trades about 0.03 of its potential returns per unit of risk. Silergy Corp is currently generating about -0.03 per unit of risk. If you would invest  4,513  in United Microelectronics on March 11, 2024 and sell it today you would earn a total of  997.00  from holding United Microelectronics or generate 22.09% return on investment over 90 days.

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

United Microelectronics  vs.  Silergy Corp

United Microelectronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Microelectronics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, United Microelectronics may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Silergy Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silergy Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Silergy Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Microelectronics and Silergy Corp

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

The idea behind United Microelectronics and Silergy 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.