Correlation Between Universal Display and Athelney Trust

Can any of the company-specific risk be diversified away by investing in both Universal Display and Athelney Trust 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 Athelney Trust 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 Athelney Trust plc, you can compare the effects of market volatilities on Universal Display and Athelney Trust 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 Athelney Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Athelney Trust.

Diversification Opportunities for Universal Display and Athelney Trust

0.04

Correlation Coefficient

Universal Display  Athelney Trust

Significant diversification

The 3 months correlation between Universal and Athelney is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Athelney Trust plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athelney Trust 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 Corp are associated (or correlated) with Athelney Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athelney Trust plc has no effect on the direction of Universal Display i.e., Universal Display and Athelney Trust go up and down completely randomly.

Pair Corralation between Universal Display and Athelney Trust

Assuming the 90 days trading horizon Universal Display Corp is expected to generate 3.31 times more return on investment than Athelney Trust. However, Universal Display is 3.31 times more volatile than Athelney Trust plc. It trades about 0.01 of its potential returns per unit of risk. Athelney Trust plc is currently generating about 0.0 per unit of risk. If you would invest  16,501  in Universal Display Corp on September 14, 2024 and sell it today you would lose (286.00) from holding Universal Display Corp or give up 1.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.68%
Values	Daily Returns

Universal Display Corp  vs.  Athelney Trust plc

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Athelney Trust plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Athelney Trust plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Athelney Trust is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Universal Display and Athelney Trust

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

The idea behind Universal Display Corp and Athelney Trust plc 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.