Correlation Between Universal Display and Eco Animal
Can any of the company-specific risk be diversified away by investing in both Universal Display and Eco Animal 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 Eco Animal 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 Eco Animal Health, you can compare the effects of market volatilities on Universal Display and Eco Animal 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 Eco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Eco Animal.
Diversification Opportunities for Universal Display and Eco Animal
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and Eco is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Eco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Animal Health 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 Eco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Animal Health has no effect on the direction of Universal Display i.e., Universal Display and Eco Animal go up and down completely randomly.
Pair Corralation between Universal Display and Eco Animal
Assuming the 90 days trading horizon Universal Display Corp is expected to under-perform the Eco Animal. But the stock apears to be less risky and, when comparing its historical volatility, Universal Display Corp is 1.17 times less risky than Eco Animal. The stock trades about -0.2 of its potential returns per unit of risk. The Eco Animal Health is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 7,250 in Eco Animal Health on September 13, 2024 and sell it today you would lose (200.00) from holding Eco Animal Health or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Universal Display Corp vs. Eco Animal Health
Performance |
| Timeline |
| Universal Display Corp |
| Eco Animal Health |
Universal Display and Eco Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Eco Animal
The main advantage of trading using opposite Universal Display and Eco Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Eco Animal 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 Eco Animal will offset losses from the drop in Eco Animal's long position.| Universal Display vs. Samsung Electronics Co | Universal Display vs. Samsung Electronics Co | Universal Display vs. Hyundai Motor | Universal Display vs. Reliance Industries Ltd |
| Eco Animal vs. St Galler Kantonalbank | Eco Animal vs. JD Sports Fashion | Eco Animal vs. Universal Display Corp | Eco Animal vs. OneSavings Bank 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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