Correlation Between Universal Display and Transportadora
Can any of the company-specific risk be diversified away by investing in both Universal Display and Transportadora 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 Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and Transportadora de Gas, you can compare the effects of market volatilities on Universal Display and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Transportadora.
Diversification Opportunities for Universal Display and Transportadora
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and Transportadora is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Universal Display i.e., Universal Display and Transportadora go up and down completely randomly.
Pair Corralation between Universal Display and Transportadora
Given the investment horizon of 90 days Universal Display is expected to under-perform the Transportadora. But the stock apears to be less risky and, when comparing its historical volatility, Universal Display is 1.76 times less risky than Transportadora. The stock trades about -0.25 of its potential returns per unit of risk. The Transportadora de Gas is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 2,240 in Transportadora de Gas on September 1, 2024 and sell it today you would earn a total of 732.00 from holding Transportadora de Gas or generate 32.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. Transportadora de Gas
Performance |
| Timeline |
| Universal Display |
| Transportadora de Gas |
Universal Display and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Transportadora
The main advantage of trading using opposite Universal Display and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| Universal Display vs. Plexus Corp | Universal Display vs. Methode Electronics | Universal Display vs. Benchmark Electronics | Universal Display vs. Bel Fuse A |
| Transportadora vs. Petroleo Brasileiro Petrobras | Transportadora vs. Ecopetrol SA ADR | Transportadora vs. Petrleo Brasileiro SA | Transportadora vs. Equinor ASA ADR |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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