Correlation Between Universal Display and Lion One
Can any of the company-specific risk be diversified away by investing in both Universal Display and Lion One 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 Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and Lion One Metals, you can compare the effects of market volatilities on Universal Display and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Lion One.
Diversification Opportunities for Universal Display and Lion One
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Lion is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Universal Display i.e., Universal Display and Lion One go up and down completely randomly.
Pair Corralation between Universal Display and Lion One
Given the investment horizon of 90 days Universal Display is expected to generate 1.13 times more return on investment than Lion One. However, Universal Display is 1.13 times more volatile than Lion One Metals. It trades about -0.27 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.35 per unit of risk. If you would invest 20,416 in Universal Display on August 28, 2024 and sell it today you would lose (3,482) from holding Universal Display or give up 17.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. Lion One Metals
Performance |
| Timeline |
| Universal Display |
| Lion One Metals |
Universal Display and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Lion One
The main advantage of trading using opposite Universal Display and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Universal Display vs. Plexus Corp | Universal Display vs. Methode Electronics | Universal Display vs. Benchmark Electronics | Universal Display vs. Bel Fuse A |
| Lion One vs. Ascendant Resources | Lion One vs. Cantex Mine Development | Lion One vs. Amarc Resources | Lion One vs. Sterling Metals Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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