Correlation Between Universal Display and PLAYTECH
Can any of the company-specific risk be diversified away by investing in both Universal Display and PLAYTECH 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 PLAYTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and PLAYTECH, you can compare the effects of market volatilities on Universal Display and PLAYTECH 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 PLAYTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and PLAYTECH.
Diversification Opportunities for Universal Display and PLAYTECH
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Universal and PLAYTECH is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and PLAYTECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTECH 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 PLAYTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTECH has no effect on the direction of Universal Display i.e., Universal Display and PLAYTECH go up and down completely randomly.
Pair Corralation between Universal Display and PLAYTECH
Assuming the 90 days horizon Universal Display is expected to generate 15.6 times less return on investment than PLAYTECH. In addition to that, Universal Display is 1.04 times more volatile than PLAYTECH. It trades about 0.01 of its total potential returns per unit of risk. PLAYTECH is currently generating about 0.1 per unit of volatility. If you would invest 488.00 in PLAYTECH on September 3, 2024 and sell it today you would earn a total of 378.00 from holding PLAYTECH or generate 77.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. PLAYTECH
Performance |
| Timeline |
| Universal Display |
| PLAYTECH |
Universal Display and PLAYTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and PLAYTECH
The main advantage of trading using opposite Universal Display and PLAYTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, PLAYTECH 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 PLAYTECH will offset losses from the drop in PLAYTECH's long position.| Universal Display vs. ASML HOLDING NY | Universal Display vs. ASML Holding NV | Universal Display vs. ASML Holding NV | Universal Display vs. Lam Research |
| PLAYTECH vs. G III Apparel Group | PLAYTECH vs. URBAN OUTFITTERS | PLAYTECH vs. SBA Communications Corp | PLAYTECH vs. Cleanaway Waste Management |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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