Correlation Between Universal Display and Interlink Electronics
Can any of the company-specific risk be diversified away by investing in both Universal Display and Interlink Electronics 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 Universal Display and Interlink Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and Interlink Electronics, you can compare the effects of market volatilities on Universal Display and Interlink Electronics 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 Universal Display with a short position of Interlink Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Interlink Electronics.
Diversification Opportunities for Universal Display and Interlink Electronics
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Interlink is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Interlink Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interlink Electronics and Universal Display 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 Universal Display are associated (or correlated) with Interlink Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interlink Electronics has no effect on the direction of Universal Display i.e., Universal Display and Interlink Electronics go up and down completely randomly.
Pair Corralation between Universal Display and Interlink Electronics
Given the investment horizon of 90 days Universal Display is expected to generate 0.53 times more return on investment than Interlink Electronics. However, Universal Display is 1.89 times less risky than Interlink Electronics. It trades about 0.03 of its potential returns per unit of risk. Interlink Electronics is currently generating about 0.0 per unit of risk. If you would invest 14,293 in Universal Display on September 2, 2024 and sell it today you would earn a total of 2,159 from holding Universal Display or generate 15.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Universal Display vs. Interlink Electronics
Performance |
| Timeline |
| Universal Display |
| Interlink Electronics |
Universal Display and Interlink Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Interlink Electronics
The main advantage of trading using opposite Universal Display and Interlink Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Interlink Electronics 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 Interlink Electronics will offset losses from the drop in Interlink Electronics' long position.| Universal Display vs. Plexus Corp | Universal Display vs. Methode Electronics | Universal Display vs. Benchmark Electronics | Universal Display vs. Bel Fuse A |
| Interlink Electronics vs. Methode Electronics | Interlink Electronics vs. Bel Fuse A | Interlink Electronics vs. CTS Corporation | Interlink Electronics vs. MicroCloud Hologram |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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