Correlation Between Allied Motion and Universal Display
Can any of the company-specific risk be diversified away by investing in both Allied Motion 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 Allied Motion and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Motion Technologies and Universal Display, you can compare the effects of market volatilities on Allied Motion 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 Allied Motion with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Motion and Universal Display.
Diversification Opportunities for Allied Motion and Universal Display
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Allied and Universal is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Allied Motion Technologies and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and Allied Motion 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 Allied Motion Technologies 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 Allied Motion i.e., Allied Motion and Universal Display go up and down completely randomly.
Pair Corralation between Allied Motion and Universal Display
Given the investment horizon of 90 days Allied Motion is expected to generate 1.31 times less return on investment than Universal Display. In addition to that, Allied Motion is 1.05 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 0.05 per unit of volatility. If you would invest 11,049 in Universal Display on August 28, 2024 and sell it today you would earn a total of 5,885 from holding Universal Display or generate 53.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.72% |
| Values | Daily Returns |
Allied Motion Technologies vs. Universal Display
Performance |
| Timeline |
| Allied Motion Techno |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Universal Display |
Allied Motion and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Motion and Universal Display
The main advantage of trading using opposite Allied Motion and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Motion 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.| Allied Motion vs. Plexus Corp | Allied Motion vs. Sanmina | Allied Motion vs. Bel Fuse A | Allied Motion vs. Methode Electronics |
| 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 CEOs Directory module to screen CEOs from public companies around the world.
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