Correlation Between Universal Display and Auction Technology

Can any of the company-specific risk be diversified away by investing in both Universal Display and Auction Technology 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 Auction Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Universal Display Corp and Auction Technology Group, you can compare the effects of market volatilities on Universal Display and Auction Technology 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 Auction Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Auction Technology.

Diversification Opportunities for Universal Display and Auction Technology

-0.76

Correlation Coefficient

Universal Display  Auction Technology

Pay attention - limited upside

The 3 months correlation between Universal and Auction is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Auction Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auction Technology 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 Corp are associated (or correlated) with Auction Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auction Technology has no effect on the direction of Universal Display i.e., Universal Display and Auction Technology go up and down completely randomly.

Pair Corralation between Universal Display and Auction Technology

Assuming the 90 days trading horizon Universal Display Corp is expected to under-perform the Auction Technology. In addition to that, Universal Display is 1.03 times more volatile than Auction Technology Group. It trades about -0.01 of its total potential returns per unit of risk. Auction Technology Group is currently generating about 0.15 per unit of volatility. If you would invest  55,400  in Auction Technology Group on October 22, 2024 and sell it today you would earn a total of  2,600  from holding Auction Technology Group or generate 4.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	88.89%
Values	Daily Returns

Universal Display Corp  vs.  Auction Technology Group

Universal Display Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Display Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Auction Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Auction Technology Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Auction Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal Display and Auction Technology

The main advantage of trading using opposite Universal Display and Auction Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Auction Technology 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 Auction Technology will offset losses from the drop in Auction Technology's long position.

The idea behind Universal Display Corp and Auction Technology Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.