Correlation Between Sony Corp and Universal Electronics
Can any of the company-specific risk be diversified away by investing in both Sony Corp and Universal 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 Sony Corp and Universal Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Corp and Universal Electronics, you can compare the effects of market volatilities on Sony Corp and Universal 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 Sony Corp with a short position of Universal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony Corp and Universal Electronics.
Diversification Opportunities for Sony Corp and Universal Electronics
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sony and Universal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sony Corp and Universal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Electronics and Sony Corp 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 Sony Corp are associated (or correlated) with Universal Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Electronics has no effect on the direction of Sony Corp i.e., Sony Corp and Universal Electronics go up and down completely randomly.
Pair Corralation between Sony Corp and Universal Electronics
Assuming the 90 days horizon Sony Corp is expected to generate 1.46 times more return on investment than Universal Electronics. However, Sony Corp is 1.46 times more volatile than Universal Electronics. It trades about -0.01 of its potential returns per unit of risk. Universal Electronics is currently generating about -0.08 per unit of risk. If you would invest 2,068 in Sony Corp on October 20, 2024 and sell it today you would lose (19.00) from holding Sony Corp or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sony Corp vs. Universal Electronics
Performance |
| Timeline |
| Sony Corp |
| Universal Electronics |
Sony Corp and Universal Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony Corp and Universal Electronics
The main advantage of trading using opposite Sony Corp and Universal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony Corp position performs unexpectedly, Universal 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 Universal Electronics will offset losses from the drop in Universal Electronics' long position.| Sony Corp vs. LG Display Co | Sony Corp vs. Sonos Inc | Sony Corp vs. TCL Electronics Holdings | Sony Corp vs. Sharp Corp ADR |
| Universal Electronics vs. LG Display Co | Universal Electronics vs. Zepp Health Corp | Universal Electronics vs. Sonos Inc | Universal Electronics vs. VOXX International |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |