Correlation Between Celestica and United Microelectronics

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Can any of the company-specific risk be diversified away by investing in both Celestica 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 Celestica and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celestica and United Microelectronics, you can compare the effects of market volatilities on Celestica 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 Celestica with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celestica and United Microelectronics.

Diversification Opportunities for Celestica and United Microelectronics

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Celestica and United is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Celestica 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 Celestica 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 Celestica i.e., Celestica and United Microelectronics go up and down completely randomly.

Pair Corralation between Celestica and United Microelectronics

Considering the 90-day investment horizon Celestica is expected to generate 1.61 times more return on investment than United Microelectronics. However, Celestica is 1.61 times more volatile than United Microelectronics. It trades about 0.14 of its potential returns per unit of risk. United Microelectronics is currently generating about 0.13 per unit of risk. If you would invest  4,176  in Celestica on December 29, 2023 and sell it today you would earn a total of  380.00  from holding Celestica or generate 9.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Celestica  vs.  United Microelectronics

 Performance 
       Timeline  
Celestica 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.
United Microelectronics 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days United Microelectronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, United Microelectronics is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Celestica and United Microelectronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Celestica and United Microelectronics

The main advantage of trading using opposite Celestica and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica 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.
The idea behind Celestica and United Microelectronics 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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