Correlation Between Universal Display and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Universal Display and Gamma Communications 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 Gamma Communications 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 Gamma Communications PLC, you can compare the effects of market volatilities on Universal Display and Gamma Communications 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Gamma Communications.
Diversification Opportunities for Universal Display and Gamma Communications
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and Gamma is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of Universal Display i.e., Universal Display and Gamma Communications go up and down completely randomly.
Pair Corralation between Universal Display and Gamma Communications
Assuming the 90 days trading horizon Universal Display Corp is expected to generate 1.87 times more return on investment than Gamma Communications. However, Universal Display is 1.87 times more volatile than Gamma Communications PLC. It trades about 0.02 of its potential returns per unit of risk. Gamma Communications PLC is currently generating about 0.03 per unit of risk. If you would invest 13,412 in Universal Display Corp on November 1, 2024 and sell it today you would earn a total of 1,722 from holding Universal Display Corp or generate 12.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.95% |
| Values | Daily Returns |
Universal Display Corp vs. Gamma Communications PLC
Performance |
| Timeline |
| Universal Display Corp |
| Gamma Communications PLC |
Universal Display and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Gamma Communications
The main advantage of trading using opposite Universal Display and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| Universal Display vs. Berkshire Hathaway | Universal Display vs. Samsung Electronics Co | Universal Display vs. Samsung Electronics Co | Universal Display vs. Chocoladefabriken Lindt Spruengli |
| Gamma Communications vs. Eastinco Mining Exploration | Gamma Communications vs. Griffin Mining | Gamma Communications vs. Bisichi Mining PLC | Gamma Communications vs. Lundin Mining Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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