Correlation Between Universal Display and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both Universal Display and Playtech Plc 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 Plc 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 plc, you can compare the effects of market volatilities on Universal Display and Playtech Plc 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 Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Playtech Plc.
Diversification Opportunities for Universal Display and Playtech Plc
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Universal and Playtech is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc 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 Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech plc has no effect on the direction of Universal Display i.e., Universal Display and Playtech Plc go up and down completely randomly.
Pair Corralation between Universal Display and Playtech Plc
Assuming the 90 days horizon Universal Display is expected to generate 1.89 times more return on investment than Playtech Plc. However, Universal Display is 1.89 times more volatile than Playtech plc. It trades about 0.12 of its potential returns per unit of risk. Playtech plc is currently generating about 0.12 per unit of risk. If you would invest 14,175 in Universal Display on November 28, 2024 and sell it today you would earn a total of 815.00 from holding Universal Display or generate 5.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Universal Display vs. Playtech plc
Performance |
| Timeline |
| Universal Display |
| Playtech plc |
Universal Display and Playtech Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Playtech Plc
The main advantage of trading using opposite Universal Display and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Playtech Plc 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 Plc will offset losses from the drop in Playtech Plc's long position.| Universal Display vs. Host Hotels Resorts | Universal Display vs. Western Copper and | Universal Display vs. InterContinental Hotels Group | Universal Display vs. MHP Hotel AG |
| Playtech Plc vs. Stag Industrial | Playtech Plc vs. SERI INDUSTRIAL EO | Playtech Plc vs. National Beverage Corp | Playtech Plc vs. THAI BEVERAGE |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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