Correlation Between Universal Display and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Universal Display and XLMedia 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 XLMedia 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 XLMedia PLC, you can compare the effects of market volatilities on Universal Display and XLMedia 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and XLMedia PLC.
Diversification Opportunities for Universal Display and XLMedia PLC
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Universal and XLMedia is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Universal Display i.e., Universal Display and XLMedia PLC go up and down completely randomly.
Pair Corralation between Universal Display and XLMedia PLC
Assuming the 90 days trading horizon Universal Display is expected to generate 7.21 times less return on investment than XLMedia PLC. But when comparing it to its historical volatility, Universal Display Corp is 2.41 times less risky than XLMedia PLC. It trades about 0.01 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 825.00 in XLMedia PLC on December 11, 2024 and sell it today you would earn a total of 215.00 from holding XLMedia PLC or generate 26.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.48% |
| Values | Daily Returns |
Universal Display Corp vs. XLMedia PLC
Performance |
| Timeline |
| Universal Display Corp |
| XLMedia PLC |
Universal Display and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and XLMedia PLC
The main advantage of trading using opposite Universal Display and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, XLMedia 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Universal Display vs. International Biotechnology Trust | Universal Display vs. EVS Broadcast Equipment | Universal Display vs. Pfeiffer Vacuum Technology | Universal Display vs. Ashtead Technology Holdings |
| XLMedia PLC vs. Tavistock Investments Plc | XLMedia PLC vs. Aeorema Communications Plc | XLMedia PLC vs. Verizon Communications | XLMedia PLC vs. Universal Display 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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