Correlation Between African Agriculture and Universal Display
Can any of the company-specific risk be diversified away by investing in both African Agriculture and Universal Display 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 African Agriculture and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between African Agriculture Holdings and Universal Display, you can compare the effects of market volatilities on African Agriculture and Universal Display 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 African Agriculture with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Agriculture and Universal Display.
Diversification Opportunities for African Agriculture and Universal Display
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between African and Universal is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding African Agriculture Holdings and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and African Agriculture 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 African Agriculture Holdings are associated (or correlated) with Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display has no effect on the direction of African Agriculture i.e., African Agriculture and Universal Display go up and down completely randomly.
Pair Corralation between African Agriculture and Universal Display
Given the investment horizon of 90 days African Agriculture Holdings is expected to under-perform the Universal Display. In addition to that, African Agriculture is 4.26 times more volatile than Universal Display. It trades about -0.2 of its total potential returns per unit of risk. Universal Display is currently generating about -0.01 per unit of volatility. If you would invest 18,232 in Universal Display on September 5, 2024 and sell it today you would lose (1,796) from holding Universal Display or give up 9.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 63.2% |
| Values | Daily Returns |
African Agriculture Holdings vs. Universal Display
Performance |
| Timeline |
| African Agriculture |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Universal Display |
African Agriculture and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Agriculture and Universal Display
The main advantage of trading using opposite African Agriculture and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Agriculture position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display's long position.| African Agriculture vs. Universal Display | African Agriculture vs. Funko Inc | African Agriculture vs. Marchex | African Agriculture vs. CarsalesCom Ltd ADR |
| Universal Display vs. Plexus Corp | Universal Display vs. Methode Electronics | Universal Display vs. Benchmark Electronics | Universal Display vs. Bel Fuse A |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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