Correlation Between Everspin Technologies and United Microelectronics

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

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

Diversification Opportunities for Everspin Technologies and United Microelectronics

-0.23

Correlation Coefficient

Everspin Technologies  United Microelectronics

Very good diversification

The 3 months correlation between Everspin and United is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Everspin Technologies and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Everspin Technologies 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 Everspin Technologies 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 Everspin Technologies i.e., Everspin Technologies and United Microelectronics go up and down completely randomly.

Pair Corralation between Everspin Technologies and United Microelectronics

Given the investment horizon of 90 days Everspin Technologies is expected to generate 1.17 times more return on investment than United Microelectronics. However, Everspin Technologies is 1.17 times more volatile than United Microelectronics. It trades about -0.3 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.4 per unit of risk. If you would invest  824.00  in Everspin Technologies on January 20, 2024 and sell it today you would lose (75.00) from holding Everspin Technologies or give up 9.1% of portfolio value over 90 days.

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

Everspin Technologies  vs.  United Microelectronics

Everspin Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everspin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

United Microelectronics

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Everspin Technologies and United Microelectronics

The main advantage of trading using opposite Everspin Technologies and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everspin Technologies 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 Everspin Technologies 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.