Correlation Between Albion Technology and Universal Display
Can any of the company-specific risk be diversified away by investing in both Albion Technology 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 Albion Technology and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albion Technology General and Universal Display Corp, you can compare the effects of market volatilities on Albion Technology 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 Albion Technology with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albion Technology and Universal Display.
Diversification Opportunities for Albion Technology and Universal Display
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Albion and Universal is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Albion Technology General and Universal Display Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display Corp and Albion Technology 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 Albion Technology General 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 Corp has no effect on the direction of Albion Technology i.e., Albion Technology and Universal Display go up and down completely randomly.
Pair Corralation between Albion Technology and Universal Display
Assuming the 90 days trading horizon Albion Technology is expected to generate 10.59 times less return on investment than Universal Display. But when comparing it to its historical volatility, Albion Technology General is 3.97 times less risky than Universal Display. It trades about 0.02 of its potential returns per unit of risk. Universal Display Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 11,270 in Universal Display Corp on August 30, 2024 and sell it today you would earn a total of 4,930 from holding Universal Display Corp or generate 43.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.09% |
| Values | Daily Returns |
Albion Technology General vs. Universal Display Corp
Performance |
| Timeline |
| Albion Technology General |
| Universal Display Corp |
Albion Technology and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albion Technology and Universal Display
The main advantage of trading using opposite Albion Technology and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albion Technology 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.| Albion Technology vs. Toyota Motor Corp | Albion Technology vs. Lendinvest PLC | Albion Technology vs. Neometals | Albion Technology vs. Coor Service Management |
| Universal Display vs. Lendinvest PLC | Universal Display vs. Neometals | Universal Display vs. Albion Technology General | Universal Display vs. Jupiter Fund Management |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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