Correlation Between Globe Trade and Universal Display
Can any of the company-specific risk be diversified away by investing in both Globe Trade 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 Globe Trade and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Trade Centre and Universal Display, you can compare the effects of market volatilities on Globe Trade 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 Globe Trade with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Trade and Universal Display.
Diversification Opportunities for Globe Trade and Universal Display
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Globe and Universal is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and Globe Trade 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 Globe Trade Centre 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 Globe Trade i.e., Globe Trade and Universal Display go up and down completely randomly.
Pair Corralation between Globe Trade and Universal Display
Assuming the 90 days trading horizon Globe Trade is expected to generate 2.4 times less return on investment than Universal Display. But when comparing it to its historical volatility, Globe Trade Centre is 1.39 times less risky than Universal Display. It trades about 0.03 of its potential returns per unit of risk. Universal Display is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,853 in Universal Display on September 13, 2024 and sell it today you would earn a total of 4,997 from holding Universal Display or generate 50.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Trade Centre vs. Universal Display
Performance |
| Timeline |
| Globe Trade Centre |
| Universal Display |
Globe Trade and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Trade and Universal Display
The main advantage of trading using opposite Globe Trade and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Trade 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.| Globe Trade vs. Apple Inc | Globe Trade vs. Apple Inc | Globe Trade vs. Apple Inc | Globe Trade vs. Apple Inc |
| Universal Display vs. Applied Materials | Universal Display vs. Tokyo Electron Limited | Universal Display vs. Superior Plus Corp | Universal Display vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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