Correlation Between Universal Display and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Universal Display and Solstad Offshore 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 Universal Display and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display Corp and Solstad Offshore ASA, you can compare the effects of market volatilities on Universal Display and Solstad Offshore 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 Universal Display with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Solstad Offshore.
Diversification Opportunities for Universal Display and Solstad Offshore
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and Solstad is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA and Universal Display 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 Universal Display Corp are associated (or correlated) with Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of Universal Display i.e., Universal Display and Solstad Offshore go up and down completely randomly.
Pair Corralation between Universal Display and Solstad Offshore
Assuming the 90 days trading horizon Universal Display Corp is expected to under-perform the Solstad Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Universal Display Corp is 1.6 times less risky than Solstad Offshore. The stock trades about -0.36 of its potential returns per unit of risk. The Solstad Offshore ASA is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 3,190 in Solstad Offshore ASA on August 30, 2024 and sell it today you would earn a total of 1,110 from holding Solstad Offshore ASA or generate 34.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display Corp vs. Solstad Offshore ASA
Performance |
| Timeline |
| Universal Display Corp |
| Solstad Offshore ASA |
Universal Display and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Solstad Offshore
The main advantage of trading using opposite Universal Display and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore's long position.| Universal Display vs. Tungsten West PLC | Universal Display vs. Argo Group Limited | Universal Display vs. Hardide PLC | Universal Display vs. Versarien PLC |
| Solstad Offshore vs. Tungsten West PLC | Solstad Offshore vs. Argo Group Limited | Solstad Offshore vs. Hardide PLC | Solstad Offshore vs. Versarien PLC |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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