Correlation Between Universal Display and Antofagasta PLC
Can any of the company-specific risk be diversified away by investing in both Universal Display and Antofagasta PLC 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 Antofagasta PLC 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 Antofagasta PLC, you can compare the effects of market volatilities on Universal Display and Antofagasta PLC 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 Antofagasta PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Antofagasta PLC.
Diversification Opportunities for Universal Display and Antofagasta PLC
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Universal and Antofagasta is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Antofagasta PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta PLC 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 Antofagasta PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta PLC has no effect on the direction of Universal Display i.e., Universal Display and Antofagasta PLC go up and down completely randomly.
Pair Corralation between Universal Display and Antofagasta PLC
Assuming the 90 days trading horizon Universal Display Corp is expected to generate 1.32 times more return on investment than Antofagasta PLC. However, Universal Display is 1.32 times more volatile than Antofagasta PLC. It trades about 0.05 of its potential returns per unit of risk. Antofagasta PLC is currently generating about 0.01 per unit of risk. If you would invest 10,475 in Universal Display Corp on September 23, 2024 and sell it today you would earn a total of 4,857 from holding Universal Display Corp or generate 46.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 84.03% |
| Values | Daily Returns |
Universal Display Corp vs. Antofagasta PLC
Performance |
| Timeline |
| Universal Display Corp |
| Antofagasta PLC |
Universal Display and Antofagasta PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Antofagasta PLC
The main advantage of trading using opposite Universal Display and Antofagasta PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Antofagasta PLC 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 Antofagasta PLC will offset losses from the drop in Antofagasta PLC's long position.| Universal Display vs. Electronic Arts | Universal Display vs. Samsung Electronics Co | Universal Display vs. Capital Drilling | Universal Display vs. Virgin Wines UK |
| Antofagasta PLC vs. Virgin Wines UK | Antofagasta PLC vs. DFS Furniture PLC | Antofagasta PLC vs. Universal Display Corp | Antofagasta PLC vs. Home Depot |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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