Correlation Between Universal Display and AAC TECHNOLOGHLDGADR
Can any of the company-specific risk be diversified away by investing in both Universal Display and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on Universal Display and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and AAC TECHNOLOGHLDGADR.
Diversification Opportunities for Universal Display and AAC TECHNOLOGHLDGADR
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and AAC is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of Universal Display i.e., Universal Display and AAC TECHNOLOGHLDGADR go up and down completely randomly.
Pair Corralation between Universal Display and AAC TECHNOLOGHLDGADR
Assuming the 90 days horizon Universal Display is expected to under-perform the AAC TECHNOLOGHLDGADR. But the stock apears to be less risky and, when comparing its historical volatility, Universal Display is 1.43 times less risky than AAC TECHNOLOGHLDGADR. The stock trades about 0.0 of its potential returns per unit of risk. The AAC TECHNOLOGHLDGADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 261.00 in AAC TECHNOLOGHLDGADR on September 12, 2024 and sell it today you would earn a total of 183.00 from holding AAC TECHNOLOGHLDGADR or generate 70.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. AAC TECHNOLOGHLDGADR
Performance |
| Timeline |
| Universal Display |
| AAC TECHNOLOGHLDGADR |
Universal Display and AAC TECHNOLOGHLDGADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and AAC TECHNOLOGHLDGADR
The main advantage of trading using opposite Universal Display and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR will offset losses from the drop in AAC TECHNOLOGHLDGADR's long position.| Universal Display vs. Applied Materials | Universal Display vs. Tokyo Electron Limited | Universal Display vs. Superior Plus Corp | Universal Display vs. SIVERS SEMICONDUCTORS AB |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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