Correlation Between Universal Electronics and Sharp Corp
Can any of the company-specific risk be diversified away by investing in both Universal Electronics and Sharp Corp 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 Sharp Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Electronics and Sharp Corp ADR, you can compare the effects of market volatilities on Universal Electronics and Sharp Corp 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 Sharp Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Electronics and Sharp Corp.
Diversification Opportunities for Universal Electronics and Sharp Corp
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and Sharp is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Universal Electronics and Sharp Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharp Corp ADR 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 Sharp Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharp Corp ADR has no effect on the direction of Universal Electronics i.e., Universal Electronics and Sharp Corp go up and down completely randomly.
Pair Corralation between Universal Electronics and Sharp Corp
Given the investment horizon of 90 days Universal Electronics is expected to generate 1.02 times more return on investment than Sharp Corp. However, Universal Electronics is 1.02 times more volatile than Sharp Corp ADR. It trades about 0.06 of its potential returns per unit of risk. Sharp Corp ADR is currently generating about 0.02 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Electronics vs. Sharp Corp ADR
Performance |
| Timeline |
| Universal Electronics |
| Sharp Corp ADR |
Universal Electronics and Sharp Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Electronics and Sharp Corp
The main advantage of trading using opposite Universal Electronics and Sharp Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Electronics position performs unexpectedly, Sharp Corp 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 Sharp Corp will offset losses from the drop in Sharp Corp'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 |
| Sharp Corp vs. FitLife Brands, Common | Sharp Corp vs. HUMANA INC | Sharp Corp vs. SCOR PK | Sharp Corp vs. Aquagold 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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