Correlation Between UNIVERSAL DISPLAY and Carsales
Can any of the company-specific risk be diversified away by investing in both UNIVERSAL DISPLAY and Carsales 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 Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNIVERSAL DISPLAY and Carsales, you can compare the effects of market volatilities on UNIVERSAL DISPLAY and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVERSAL DISPLAY and Carsales.
Diversification Opportunities for UNIVERSAL DISPLAY and Carsales
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between UNIVERSAL and Carsales is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding UNIVERSAL DISPLAY and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of UNIVERSAL DISPLAY i.e., UNIVERSAL DISPLAY and Carsales go up and down completely randomly.
Pair Corralation between UNIVERSAL DISPLAY and Carsales
Assuming the 90 days trading horizon UNIVERSAL DISPLAY is expected to generate 1.74 times more return on investment than Carsales. However, UNIVERSAL DISPLAY is 1.74 times more volatile than Carsales. It trades about -0.01 of its potential returns per unit of risk. Carsales is currently generating about -0.41 per unit of risk. If you would invest 13,770 in UNIVERSAL DISPLAY on December 13, 2024 and sell it today you would lose (170.00) from holding UNIVERSAL DISPLAY or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNIVERSAL DISPLAY vs. Carsales
Performance |
| Timeline |
| UNIVERSAL DISPLAY |
| Carsales |
UNIVERSAL DISPLAY and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNIVERSAL DISPLAY and Carsales
The main advantage of trading using opposite UNIVERSAL DISPLAY and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVERSAL DISPLAY position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| UNIVERSAL DISPLAY vs. PPHE HOTEL GROUP | ||
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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