Correlation Between Universal Display and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both Universal Display and BE Semiconductor 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 BE Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and BE Semiconductor Industries, you can compare the effects of market volatilities on Universal Display and BE Semiconductor 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 BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and BE Semiconductor.
Diversification Opportunities for Universal Display and BE Semiconductor
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and BSI is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind 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 BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of Universal Display i.e., Universal Display and BE Semiconductor go up and down completely randomly.
Pair Corralation between Universal Display and BE Semiconductor
Assuming the 90 days horizon Universal Display is expected to under-perform the BE Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Universal Display is 1.06 times less risky than BE Semiconductor. The stock trades about -0.1 of its potential returns per unit of risk. The BE Semiconductor Industries is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 11,240 in BE Semiconductor Industries on August 28, 2024 and sell it today you would lose (45.00) from holding BE Semiconductor Industries or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Universal Display vs. BE Semiconductor Industries
Performance |
| Timeline |
| Universal Display |
| BE Semiconductor Ind |
Universal Display and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and BE Semiconductor
The main advantage of trading using opposite Universal Display and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, BE Semiconductor 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 BE Semiconductor will offset losses from the drop in BE Semiconductor's long position.| Universal Display vs. ASML HOLDING NY | Universal Display vs. Applied Materials | Universal Display vs. Superior Plus Corp | Universal Display vs. NMI Holdings |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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