Correlation Between Universal Display and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both Universal Display and Highlight Communications 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 Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and Highlight Communications AG, you can compare the effects of market volatilities on Universal Display and Highlight Communications 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 Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Highlight Communications.
Diversification Opportunities for Universal Display and Highlight Communications
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Highlight is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications 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 Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of Universal Display i.e., Universal Display and Highlight Communications go up and down completely randomly.
Pair Corralation between Universal Display and Highlight Communications
Assuming the 90 days horizon Universal Display is expected to under-perform the Highlight Communications. But the stock apears to be less risky and, when comparing its historical volatility, Universal Display is 6.7 times less risky than Highlight Communications. The stock trades about -0.02 of its potential returns per unit of risk. The Highlight Communications AG is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 108.00 in Highlight Communications AG on October 20, 2024 and sell it today you would earn a total of 44.00 from holding Highlight Communications AG or generate 40.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. Highlight Communications AG
Performance |
| Timeline |
| Universal Display |
| Highlight Communications |
Universal Display and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Highlight Communications
The main advantage of trading using opposite Universal Display and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.| Universal Display vs. Highlight Communications AG | Universal Display vs. COMPUTERSHARE | Universal Display vs. X FAB Silicon Foundries | Universal Display vs. SILICON LABORATOR |
| Highlight Communications vs. OFFICE DEPOT | Highlight Communications vs. Neinor Homes SA | Highlight Communications vs. Focus Home Interactive | Highlight Communications vs. DFS Furniture 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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