Correlation Between Universal Display and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both Universal Display and CleanTech Lithium 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 CleanTech Lithium 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 CleanTech Lithium plc, you can compare the effects of market volatilities on Universal Display and CleanTech Lithium 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 CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and CleanTech Lithium.
Diversification Opportunities for Universal Display and CleanTech Lithium
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and CleanTech is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium 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 CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of Universal Display i.e., Universal Display and CleanTech Lithium go up and down completely randomly.
Pair Corralation between Universal Display and CleanTech Lithium
Assuming the 90 days trading horizon Universal Display Corp is expected to generate 0.53 times more return on investment than CleanTech Lithium. However, Universal Display Corp is 1.89 times less risky than CleanTech Lithium. It trades about 0.02 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about -0.05 per unit of risk. If you would invest 12,998 in Universal Display Corp on October 13, 2024 and sell it today you would earn a total of 1,713 from holding Universal Display Corp or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 84.57% |
| Values | Daily Returns |
Universal Display Corp vs. CleanTech Lithium plc
Performance |
| Timeline |
| Universal Display Corp |
| CleanTech Lithium plc |
Universal Display and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and CleanTech Lithium
The main advantage of trading using opposite Universal Display and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, CleanTech Lithium 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 CleanTech Lithium will offset losses from the drop in CleanTech Lithium's long position.| Universal Display vs. Mobius Investment Trust | Universal Display vs. Gear4music Plc | Universal Display vs. Chrysalis Investments | Universal Display vs. Taylor Maritime Investments |
| CleanTech Lithium vs. LBG Media PLC | CleanTech Lithium vs. Universal Display Corp | CleanTech Lithium vs. Ubisoft Entertainment | CleanTech Lithium vs. Hollywood Bowl Group |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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