Correlation Between Universal Display and Sea
Can any of the company-specific risk be diversified away by investing in both Universal Display and Sea 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 Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and Sea, you can compare the effects of market volatilities on Universal Display and Sea 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 Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Sea.
Diversification Opportunities for Universal Display and Sea
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and Sea is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Universal Display i.e., Universal Display and Sea go up and down completely randomly.
Pair Corralation between Universal Display and Sea
Given the investment horizon of 90 days Universal Display is expected to under-perform the Sea. But the stock apears to be less risky and, when comparing its historical volatility, Universal Display is 1.09 times less risky than Sea. The stock trades about -0.36 of its potential returns per unit of risk. The Sea is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 9,535 in Sea on August 31, 2024 and sell it today you would earn a total of 2,036 from holding Sea or generate 21.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. Sea
Performance |
| Timeline |
| Universal Display |
| Sea |
Universal Display and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Sea
The main advantage of trading using opposite Universal Display and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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