Correlation Between Tungsten West and Universal Display
Can any of the company-specific risk be diversified away by investing in both Tungsten West and Universal Display 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 Tungsten West and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tungsten West PLC and Universal Display Corp, you can compare the effects of market volatilities on Tungsten West and Universal Display 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 Tungsten West with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tungsten West and Universal Display.
Diversification Opportunities for Tungsten West and Universal Display
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tungsten and Universal is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Tungsten West PLC and Universal Display Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display Corp and Tungsten West 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 Tungsten West PLC are associated (or correlated) with Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display Corp has no effect on the direction of Tungsten West i.e., Tungsten West and Universal Display go up and down completely randomly.
Pair Corralation between Tungsten West and Universal Display
Assuming the 90 days trading horizon Tungsten West PLC is expected to generate 2.65 times more return on investment than Universal Display. However, Tungsten West is 2.65 times more volatile than Universal Display Corp. It trades about 0.04 of its potential returns per unit of risk. Universal Display Corp is currently generating about -0.2 per unit of risk. If you would invest 300.00 in Tungsten West PLC on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Tungsten West PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Tungsten West PLC vs. Universal Display Corp
Performance |
| Timeline |
| Tungsten West PLC |
| Universal Display Corp |
Tungsten West and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tungsten West and Universal Display
The main advantage of trading using opposite Tungsten West and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tungsten West position performs unexpectedly, Universal Display 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 Display will offset losses from the drop in Universal Display's long position.| Tungsten West vs. Givaudan SA | Tungsten West vs. Antofagasta PLC | Tungsten West vs. Centamin PLC | Tungsten West vs. Atalaya Mining |
| Universal Display vs. Tungsten West PLC | Universal Display vs. Argo Group Limited | Universal Display vs. Hardide PLC | Universal Display vs. Versarien PLC |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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