Correlation Between American Aires and Universal Display
Can any of the company-specific risk be diversified away by investing in both American Aires 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 American Aires and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Aires and Universal Display, you can compare the effects of market volatilities on American Aires 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 American Aires with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Aires and Universal Display.
Diversification Opportunities for American Aires and Universal Display
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Universal is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding American Aires and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and American Aires 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 American Aires 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 American Aires i.e., American Aires and Universal Display go up and down completely randomly.
Pair Corralation between American Aires and Universal Display
Assuming the 90 days horizon American Aires is expected to under-perform the Universal Display. In addition to that, American Aires is 3.01 times more volatile than Universal Display. It trades about -0.04 of its total potential returns per unit of risk. Universal Display is currently generating about -0.06 per unit of volatility. If you would invest 20,849 in Universal Display on September 19, 2024 and sell it today you would lose (4,938) from holding Universal Display or give up 23.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Aires vs. Universal Display
Performance |
| Timeline |
| American Aires |
| Universal Display |
American Aires and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Aires and Universal Display
The main advantage of trading using opposite American Aires and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Aires 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.| American Aires vs. alpha En | American Aires vs. Alps Electric Co | American Aires vs. Bitmine Immersion Technologies | American Aires vs. AT S Austria |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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