Correlation Between Universal Display and SigmaTron International
Can any of the company-specific risk be diversified away by investing in both Universal Display and SigmaTron International 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 SigmaTron International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and SigmaTron International, you can compare the effects of market volatilities on Universal Display and SigmaTron International 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 SigmaTron International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and SigmaTron International.
Diversification Opportunities for Universal Display and SigmaTron International
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Universal and SigmaTron is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and SigmaTron International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SigmaTron International 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 SigmaTron International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SigmaTron International has no effect on the direction of Universal Display i.e., Universal Display and SigmaTron International go up and down completely randomly.
Pair Corralation between Universal Display and SigmaTron International
Given the investment horizon of 90 days Universal Display is expected to generate 0.57 times more return on investment than SigmaTron International. However, Universal Display is 1.76 times less risky than SigmaTron International. It trades about 0.1 of its potential returns per unit of risk. SigmaTron International is currently generating about -0.16 per unit of risk. If you would invest 14,752 in Universal Display on November 28, 2024 and sell it today you would earn a total of 1,038 from holding Universal Display or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. SigmaTron International
Performance |
| Timeline |
| Universal Display |
| SigmaTron International |
Universal Display and SigmaTron International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and SigmaTron International
The main advantage of trading using opposite Universal Display and SigmaTron International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, SigmaTron International 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 SigmaTron International will offset losses from the drop in SigmaTron International's long position.| Universal Display vs. Plexus Corp | Universal Display vs. Methode Electronics | Universal Display vs. Benchmark Electronics | Universal Display vs. Bel Fuse A |
| SigmaTron International vs. Integrated Media Technology | SigmaTron International vs. Data IO | SigmaTron International vs. Research Frontiers Incorporated | SigmaTron International vs. Maris Tech |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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