Correlation Between Universal Display and SoftBank Group
Can any of the company-specific risk be diversified away by investing in both Universal Display and SoftBank Group 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 SoftBank Group 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 SoftBank Group Corp, you can compare the effects of market volatilities on Universal Display and SoftBank Group 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 SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and SoftBank Group.
Diversification Opportunities for Universal Display and SoftBank Group
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and SoftBank is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp 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 SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of Universal Display i.e., Universal Display and SoftBank Group go up and down completely randomly.
Pair Corralation between Universal Display and SoftBank Group
Assuming the 90 days trading horizon Universal Display Corp is expected to under-perform the SoftBank Group. In addition to that, Universal Display is 1.5 times more volatile than SoftBank Group Corp. It trades about -0.36 of its total potential returns per unit of risk. SoftBank Group Corp is currently generating about -0.19 per unit of volatility. If you would invest 950,000 in SoftBank Group Corp on August 30, 2024 and sell it today you would lose (72,000) from holding SoftBank Group Corp or give up 7.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Universal Display Corp vs. SoftBank Group Corp
Performance |
| Timeline |
| Universal Display Corp |
| SoftBank Group Corp |
Universal Display and SoftBank Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and SoftBank Group
The main advantage of trading using opposite Universal Display and SoftBank Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, SoftBank Group 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 SoftBank Group will offset losses from the drop in SoftBank Group's long position.| Universal Display vs. Lendinvest PLC | Universal Display vs. Neometals | Universal Display vs. Albion Technology General | Universal Display vs. Jupiter Fund Management |
| SoftBank Group vs. Toyota Motor Corp | SoftBank Group vs. OTP Bank Nyrt | SoftBank Group vs. Cognizant Technology Solutions | SoftBank Group vs. Lendinvest 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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