Correlation Between Universal Electronics and LG Display
Can any of the company-specific risk be diversified away by investing in both Universal Electronics and LG 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 Universal Electronics and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Electronics and LG Display Co, you can compare the effects of market volatilities on Universal Electronics and LG 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 Universal Electronics with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Electronics and LG Display.
Diversification Opportunities for Universal Electronics and LG Display
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and LPL is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Universal Electronics and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Universal Electronics 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 Electronics are associated (or correlated) with LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of Universal Electronics i.e., Universal Electronics and LG Display go up and down completely randomly.
Pair Corralation between Universal Electronics and LG Display
Given the investment horizon of 90 days Universal Electronics is expected to generate 1.43 times more return on investment than LG Display. However, Universal Electronics is 1.43 times more volatile than LG Display Co. It trades about 0.06 of its potential returns per unit of risk. LG Display Co is currently generating about -0.04 per unit of risk. If you would invest 779.00 in Universal Electronics on August 26, 2024 and sell it today you would earn a total of 354.00 from holding Universal Electronics or generate 45.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Electronics vs. LG Display Co
Performance |
| Timeline |
| Universal Electronics |
| LG Display |
Universal Electronics and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Electronics and LG Display
The main advantage of trading using opposite Universal Electronics and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Electronics position performs unexpectedly, LG 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 LG Display will offset losses from the drop in LG Display's long position.| Universal Electronics vs. LG Display Co | Universal Electronics vs. Vizio Holding Corp | Universal Electronics vs. Zepp Health Corp | Universal Electronics vs. Sonos Inc |
| LG Display vs. VOXX International | LG Display vs. Vizio Holding Corp | LG Display vs. Turtle Beach Corp | LG Display vs. Emerson Radio |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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