Correlation Between Unimicron Technology and Swancor Holding

Can any of the company-specific risk be diversified away by investing in both Unimicron Technology and Swancor Holding 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 Unimicron Technology and Swancor Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Unimicron Technology and Swancor Holding

-0.58

Correlation Coefficient

Unimicron Technology  Swancor Holding

Excellent diversification

The 3 months correlation between Unimicron and Swancor is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Unimicron Technology Corp and Swancor Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swancor Holding and Unimicron Technology 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 Unimicron Technology Corp are associated (or correlated) with Swancor Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swancor Holding has no effect on the direction of Unimicron Technology i.e., Unimicron Technology and Swancor Holding go up and down completely randomly.

Pair Corralation between Unimicron Technology and Swancor Holding

Assuming the 90 days trading horizon Unimicron Technology Corp is expected to under-perform the Swancor Holding. But the stock apears to be less risky and, when comparing its historical volatility, Unimicron Technology Corp is 1.89 times less risky than Swancor Holding. The stock trades about -0.17 of its potential returns per unit of risk. The Swancor Holding Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  13,950  in Swancor Holding Co on March 28, 2024 and sell it today you would earn a total of  450.00  from holding Swancor Holding Co or generate 3.23% return on investment over 90 days.

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

Unimicron Technology Corp  vs.  Swancor Holding Co

Unimicron Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unimicron Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Unimicron Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Swancor Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Swancor Holding Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Swancor Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unimicron Technology and Swancor Holding

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

The idea behind Unimicron Technology Corp and Swancor Holding 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 Global Correlations module to find global opportunities by holding instruments from different markets.