Correlation Between GUDANG GARAM and UNIVERSAL DISPLAY
Can any of the company-specific risk be diversified away by investing in both GUDANG GARAM 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 GUDANG GARAM and UNIVERSAL DISPLAY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GUDANG GARAM and UNIVERSAL DISPLAY, you can compare the effects of market volatilities on GUDANG GARAM 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 GUDANG GARAM with a short position of UNIVERSAL DISPLAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUDANG GARAM and UNIVERSAL DISPLAY.
Diversification Opportunities for GUDANG GARAM and UNIVERSAL DISPLAY
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between GUDANG and UNIVERSAL is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding GUDANG GARAM and UNIVERSAL DISPLAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL DISPLAY and GUDANG GARAM 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 GUDANG GARAM 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 GUDANG GARAM i.e., GUDANG GARAM and UNIVERSAL DISPLAY go up and down completely randomly.
Pair Corralation between GUDANG GARAM and UNIVERSAL DISPLAY
Assuming the 90 days trading horizon GUDANG GARAM is expected to under-perform the UNIVERSAL DISPLAY. But the stock apears to be less risky and, when comparing its historical volatility, GUDANG GARAM is 1.08 times less risky than UNIVERSAL DISPLAY. The stock trades about -0.06 of its potential returns per unit of risk. The UNIVERSAL DISPLAY is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12,236 in UNIVERSAL DISPLAY on October 28, 2024 and sell it today you would earn a total of 2,044 from holding UNIVERSAL DISPLAY or generate 16.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GUDANG GARAM vs. UNIVERSAL DISPLAY
Performance |
| Timeline |
| GUDANG GARAM |
| UNIVERSAL DISPLAY |
GUDANG GARAM and UNIVERSAL DISPLAY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GUDANG GARAM and UNIVERSAL DISPLAY
The main advantage of trading using opposite GUDANG GARAM and UNIVERSAL DISPLAY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUDANG GARAM 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.| GUDANG GARAM vs. Perdoceo Education | GUDANG GARAM vs. EMBARK EDUCATION LTD | GUDANG GARAM vs. GRENKELEASING Dusseldorf | GUDANG GARAM vs. BW OFFSHORE LTD |
| UNIVERSAL DISPLAY vs. Apple Inc | UNIVERSAL DISPLAY vs. Apple Inc | UNIVERSAL DISPLAY vs. Apple Inc | UNIVERSAL DISPLAY vs. Apple Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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